Family Business succession planning for future ownership of an asset such as a family company or business, landed estate or farm, is not always straightforward.

Succession Planning Considerations for Business Owners

Business Succession Advice

One of our core areas of legal advice is helping entrepreneurs and family business owners in evaluating the options available to them for the succession to their business. The process is complex with many aspects including tax considerations, funding, the skills set internally of the people in the business, whether a family member can take over, the possibility of an employee buyout, customer relationships and timescales.

Our lawyers have in-depth understanding of the process and have implemented the full range of possible outcomes which include:

  • Effecting the departure of one or more of a group of shareholders through a share buyback or capital reduction.
  • Partial Exit involving bringing in external equity ahead of a full exit by the enlarged shareholder base.
  • Demerging a business through a capital reduction demerger to allow a retiring generation to exit the business with a group of business assets, leaving the trading business behind with the next generation.
  • An Employee Buy Out (EBO). The outcome here can involve direct ownership or indirect ownership by the employees through an employee ownership trust and there are potentially significant tax savings for the departing shareholder in the utilisation of an employee ownership trust. Our team were involved in effecting the EBO of West Highland Free Press in Skye in the late 2000s.
  • A management buyout (MBO)/Vendor Initiated Management Buy Out (VIMBO). Our team implements a significant number of management buyouts every year and are fully conversant with the legal and tax issues as well as the wider skills and issues required to manage the transition process.
  • Dynastic Succession. Choosing a family member to succeed to the ownership of the business can be fraught with difficulty even before the implementation of the process from a legal and tax perspective. Because of the high concentration of family business clients we have and have advised over a significant period, we are very familiar with the processes and issues.
  • Trade sale. The number of entrepreneurial and family owned businesses making it to the second or third generation is not terribly high in proportionate terms and this results in a number of sales to competitors or financial buyers. Our business law (corporate) team is very experienced in this area of work and it does require not only the technical legal and financial skills and but a complex array of soft skills to carry a transaction across the line. We have advised many sellers in the food, beverage and hospitality sectors on disposals, some examples are listed below.

 

We’re always happy to discuss things further.
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