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Succession Planning
One of the biggest challenges encountered by family and owner managed businesses is the question of succession.
Be it a long established business which has already passed through several generations or a relatively new start up, there will come a time when you have to consider whether or not the next generation will take the company forward.
Succession Planning
Your children or other close relatives may already be working in the business. This level of engagement is a huge positive and will give the opportunity for them to shadow others, receive training both on the job and more formally and get up to speed with how the business runs. They may already be contributing in terms of future direction and objectives for the business.
The opposite may also be true with the next generation already established or forging their own careers independently. There may be opportunity for them to become involved with the business but their personal situations be it career stage, family commitments or simply geography may mean this is not the right step for them. Equally, they may not have the drive, interest or aptitude to take on the helm and move the business forward.
The other option is to look at senior management. Key individuals may well have been with the company for a long time, developing it into the organisation it is today, others may have been recruited later on for their specific skill sets. Whilst considering a management buy out option for what has traditionally been a family or owner managed business may not be the first option, with the right people and support structure in place it could be a good solution.
Planning Your Exit
When considering the right time to let go of the reins or to sell the business, we would always recommend looking at when you ideally want that exit to take place and work backwards. Exit planning isn’t an easy process and takes time to ensure that the business is in the best possible place for success, all appropriate support is in place and key people are ready to take it on.
We strongly recommend consulting with professional advisors at this point who can help and guide you through the process. At BPE we regularly advise clients throughout the business lifecycle and our Corporate and Private Wealth teams collaborate to ensure that any exit will also achieve your personal goals, be that retirement or a new venture.
What is a Business Lasting Power of Attorney?
We would always advise a business owner to have business LPAs.
Establishing powers of attorney for an owner’s business interests means that a trusted designated person is clearly nominated to take on decision making, representing the owner’s best interests. Often this is an adviser, an accountant or lawyer, who knows the business but is neither an employee nor family member. Individuals often choose to appoint a business partner, however there is a risk of conflict if the business partner is having to make decisions on behalf of the owner as Attorney which may conflict with the decision they would have made in their own right. This can be solved by considering a combination of Attorneys, which can include a business partner but not exclusively. This helps everyone during a difficult period; relieving pressure from the individual and their family, while ensuring that business decisions don’t all fall solely on the shoulders of remaining shareholders.
Delegation of powers under an LPA may only be required as a temporary measure until an owner is back on their feet and having a designated person to provide a safe pair of hands during a difficult time is even more valuable if an owner dies suddenly.
For more information on Lasting Powers of Attorney, click here.
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