You have worked hard for years to develop and make a success of your business and you want it to remain in the family.
According to estimates, seventy percent of all family businesses will not reach the next generation. If you want your company to be one of the thirty percent that does and preserve your wealth for future generations, then it is essential to plan ahead. You are perhaps not yet ready to pass on the baton. Developing a succession plan now, guarantees a smooth transition into the future and avoids the many pitfalls that you may encounter along the way.
Why do so many successful business people fail to properly arrange the succession of their business?
Possible reasons are fear of losing control of the business, lacking will to invest in the development of a succession and real estate plan or problems with choosing a successor. The latter can of course be problematic, especially where family members are concerned. The result is that many owners of family businesses adopt a wait-and-see attitude or delude themselves that everything will be fine in the end.
Succession can, however, be quite tricky, both strategically and in practical terms:
- Is there a suitable timetable for the succession?
- Are there suitable people in the next generation who can take over the business? How do I deal with the expectations of family members who do not or, on the contrary, do want to play a role in the business?
- Do my successors receive the right support and do they possess business networks that they can fall back on when they assume control?
- Which new ideas would the next generation like to contribute to the business, and is it wise to discuss this now?
- Do we need people from outside the family in management positions due to the lack of interest from within the family and/or to ensure that ‘the right man is in the right place’?
- Who should own shares, how are they acquired (method/funding) and what are the tax consequences?
- What role do the current owners play during and after the succession?
We are convinced that it is in the interest of the family and the business to have a succession strategy. Our recommendation to regularly review your succession plan, also applies to your business strategies.
This is not something you should ignore until your retirement. If, for whatever reason, you had to appoint a successor tomorrow, do you know who that would be? We would be pleased to alleviate your concerns and facilitate an effective transfer of your business. Based on our experience, we recommend that you consider the following issues:
- It is not necessary to stop or delay the succession process because you do not yet have all the answers to the questions concerning ownership. You are not alone in this. Most people who own a family business are not aware of all the options and strategies that they have at their disposal in the succession process.
- Try to understand the philosophy of the next generation of family members, because their ideas and vision for the business may differ from yours.
- Consider what a fair remuneration is for each family member that plays a role in the business.
- Make sure you have a plan for family members who are not expected to be a successor or manager in the business.
- Ensure that tax issues form an integral part of your plan, so that you can maximize the value of the business or assets that are transferred.
How can we be of assistance to you?
Meijburg & Co’s approach to succession planning makes use of a number of tools that give us a broad understanding of the relevant aspects of the family, the business and other stakeholders.
Our own expertise, gained during our years of working with successful business owners, is of course our most important quality. Based on this, we can exchange ideas with you about the consequences of all your possible decisions in the field of succession, with our focus being on your personal and business tax position, remuneration strategies and scenario planning. With our proactive and dedicated services, we provide assistance in the long term with the decisions you have to take.