04: Family business successions

The objectives of a succession plan will be greatly affected by an owner’s preferences in terms of future ownership. If the preferred future ownership is by a family member, you need to discuss this and consult with all those involved well in advance of any proposed transfer date.

The best way to sell or transfer a business to your family is to nominate a single successor. However, keeping your business in the family may not be an option due to commercial considerations or because no family member has the aptitude, skills or desire to continue running the business successfully.

Transferring ownership to family members is not always as successful as using other options, but if a family member is to succeed, a formal written plan needs to be put together to include the your future role in the business and a timetable for transferring responsibilities.

The tax implications of passing on or selling a business to a family member also need to be determined with the help of professionals. You will require legal help to structure the agreement.