Advising the Family Business
Family businesses come in all kinds of shapes and sizes from very small ventures to large multi-million pound businesses. No matter the size they all face common issues and they all need a trusted advisor to help them achieve their ambitions for the business and the family.
What is the right structure for the longevity of the family business?
Should it be a trust, holding company, partnership, charity or foundation? Should there be differentiation in where the votes are held and day-to-day management?
Is there a need to change structure and, if so, to what? What are the tax consequences of this? There are a wide range of potential tax pitfalls which must be navigated in any change of structure.
Is it time to exit the business and if this happens how are the proceeds from the sale to be managed?
How will the business be managed?
Having the right legal structure is one thing but you need a properly defined governance structure to set out how the business is managed.
You may wish to consider how family meetings are managed. For example, sticking to an agenda and rules, perhaps introducing an external third party to facilitate the meetings and keep them running smoothly.
Think about the family involvement with the business; meeting the needs of working family members and non-family directors and employees.
Planning for succession
Succession is a challenge for all businesses and covers both management and ownership. There are considerations over ownership as the business moves from one generation to the next and the need for proper reward for running the business. Expectations over income needs for the retiring generation and the income requirements for the next generation need to be managed.
There is potential for conflict over taking the business forward. Should it be sold and a capital sum be realised or should the business by built and taken forward?
Management are responsible for the day-to-day operating of the business. Some of the management may be family members and some may not. It is important that consideration is made to the relationship of the management with the wider family and to make sure there is good communications and clear definition of responsibilities.
How can we help?
I have been advising family businesses for over 20 years and if you are facing any of the issues above, please contact me for further assistance.
Date: 5th February, 2019
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