“During these times of uncertainty, should I still be considering retirement or a potential exit strategy?”
Many clients will be asking themselves this question during what is now an unprecedented time for business owners across the world. We are all navigating incredibly challenging circumstances and now, more than ever, having a clear exit plan or strong succession plan in place, which also has the capacity to adapt to changing requirements, could prove to be fundamental in ensuring the survival of your business and protecting the hard earned wealth from market uncertainty.
For an owner-managed or family owned business, a strong exit/succession plan can help to drive the growth of the business, reduce needless exposure to extra tax and prepare the owner for retirement. To be accomplished successfully, succession planning needs to be central to a company’s strategy and it is advisable to start planning sooner rather than later – especially in this current climate.
During a period of true uncertainty, it’s likely that you will focus on survival short term but you should also begin to consider the various options available to you to ensure not only the short term survival of your business, but also to implement a strategic plan for the smooth transition of ownership or management which will guarantee the survival of your business for generations to come.
For a family business, the transition from the current ‘leadership generation’ to the next can be an incredibly complex process, therefore it is necessary to address the key concerns and long term objectives of business owners. The foremost concerns are often to protect the business (or its assets) from external stakeholders, not least children’s spouses, or management exit, and to retain the business owner’s wealth whilst ensuring harmony is maintained.
A common tool for navigating these challenges is often through the use of trusts, which can be a popular and highly effective method of maintaining control over assets and protecting members of the family (either from themselves or from future spouses), as well as allowing the current owners to retain voting rights, and encouraging longer term stability for the workforce particularly if they are concerned about their own future once the shareholders step back.
If business owners were to utilise a trust in their succession strategy it would enable the individuals to access a number of benefits. The current owners can, i) protect cash sitting within their business, ii) create a safe place for shares to be held, remove the worry/hassle of finding a suitable buyer and iii) reduce needless exposure to extra tax liabilities. This protects the business, enables it to have more cash to trade, and also provides the chance to save on death taxes, and succession taxes.
If you have any queries about planning for the future and implementing a strong business succession plan, we would be delighted to have a further conversation with you about your personal circumstances.
Please feel free to call us on 0191 232 2001 or email us at info@qubic-group.com