Mergers and Acquisitions

Family Ownership Transfer

Internal Sale

Family business succession planning.

At Destined we understand the intricacies of intertwining family and business relationships. We guide families and leadership teams through the succession planning process, so your family tree will be supported and nourished for generations to come.

Selling your business to a family member.

Ideally, the intention to sell the family business will be worked into your exit plan. You can specify which stars need to align for business ownership to transition to another family member. If this intention is outlined ahead of time, and you follow the steps outlined in your exit roadmap, it will be a smooth transition from one generation to the next.

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Who

The first and most important step in your succession plan is selecting your successor.

If you have a qualified successor in mind, approach them with all familial dealings set aside. Tell them your intention, and if they’re interested, fill them in on the intricacies of where the business is operationally and commercially. If they are not already involved in the business, you will need to be candid and detailed in explaining the opportunity and your vision for their role in the organization.

For a family member to take the reins of your organization they will need to have the following traits:

Industry knowledge and the ability to run a business
Interest in and commitment to the role
Leadership qualities and the trust of the other leaders

What

Once a succession plan is communicated it is time to execute the plan.

Once an internal sale is negotiated, your successor has agreed to the terms, and an ownership transition strategy is developed, it is time to share your plan with the organization.

Respectfully communicating detailed plans for the family business transition will clarify expectations, minimize conflict, and align the team around your vision for the future.

How To

Set your successor up for success by giving them time to train and learn.

If you’ve selected a successor, it means you’re likely satisfied with their acumen and experience. They may, however, need more knowledge of specific areas of your business. It’ll behoove you then, to allow for their gradual absorption of the role by letting them experience each facet of the organization – ultimately, they should have a thorough understanding of all departments and key skills.

Remember, they likely will have a different managerial style, which is okay and should be embraced. The whole point is to set the next generation up for success, what worked for you may not work for them – or may no longer be relevant.

How taxing is this succession journey?

Your successor will face his or her own tax implications, but you can explore three notable payments or reliefs you’ll likely meet.

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Capital Gains

Selling your business, as an asset, to your successor, may require a gains tax.

Market value – as assigned to the business as an asset – is the framework by which these taxes are calculated if applied to assets for which no valuation can made, or if your business is valued at below this market value.

Business Asset Disposal Relief

You may be able to apply for business disposal relief and thus pay fewer capital gains.

Inheritance Tax Benefits

Selling your business in full or part to relatives, or passing it on as a bequest, may entitle you to business property relief on the impending inheritance tax.

Family Transfer

Accomplish a successful succession.

Transitioning your business to a family member is iconic and a testament to your achievements and family heritage. The journey is yours – Destined will travel with you and guide the way.

Contact Chris Andersen to discuss how Destined can help you transition ownership to a family member.

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