Succession Planning – Heald Solicitors
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Succession Planning in Business

Succession Planning in Business

It’s never too late to consider who will take on your business when you are ready to retire but early planning will give you the most options.

Sale of your company
Selling your company or business to a third party is not succession in the strict sense. Succession refers to a planned hand over of ownership to a pre-selected person or persons. In a third party sale you will be paid some money and (apart from helping the buyer for a defined period if they want it) that will be the end of your involvement. Genuine succession, on the other hand, requires long-term planning and your active involvement.

If you are thinking that your exit will be by sale to a third party please speak to us for our guidance pack on preparing your company for sale.

Sale to managers
A Management Buyout
This is sometimes called an MBO – a management buyout. Do you have a manager or managers with your entrepreneurial qualities who can take the company forward? Have you built a credible team that can step into your shoes?
If the answer is yes then there are ways of passing ownership to those managers:

Share buybacks
In an era where third-party sales have become more difficult companies with spare cash or a strong net asset, position can consider buying back the shares of the principal shareholder. The consequence of a comprehensive buyback process is leaving the managers who hold minority shares as the majority or sole shareholders.
The rules in this area are complex and long-term planning is needed. The main factor is getting some shares in the hands of your potential successors as early as possible; share incentive schemes are key in this area.

Share incentives
One of the big drawbacks inhibiting passing on shares to managers is a hostile tax regime which tends to see shares as disguised remuneration. One solution is the Revenue approved Enterprise Management Incentive (EMI). EMI schemes are tried and tested and used by our clients.

EMI schemes are tax efficient and very flexible – click here for more information on EMI schemes 

MBOs – Holding Companies
Sometimes a share buyback is not possible. Managers can form a buying vehicle (Holding Company) which takes the shares of the exiting owner. The Holding Company is a company formed by the managers for the purpose of holding the shares of the original company (Target). Funds can be invested and loaned to the Holding Company. The assets and revenue of the Target can be used to assist the funding of the purchase.

This is a very flexible solution but can be complex – legal and accountancy advice is needed.

Your Will
You can leave your shares or business assets in your will. There is a very favourable tax relief called Business Property Relief which means that your shares or interests in your business can be passed on through your estate.

However, you may be faced with a number of consequential questions: who will be running your company when you have gone? What if some or all of your children are not interested in your business? Do you have business partners or shareholders who have an interest in who you leave your shares or interests to?

We take a holistic approach to our clients’ business – click here for specialist information on this topic.


Talk to us about your plans for succession. We are happy to spend some time with you considering the options open to you.

Contact David Dees on 01908 662277

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