Sooner or later, every business owner comes to the point of thinking about and planning succession. In the worst case, succession will be an unplanned process starting on the owner’s death. Unplanned succession may disrupt family relations and put the continued existence of the company and the jobs of its employees at risk. In addition, the inheritance tax burden may withdraw critical liquidity from the company, which may result in its liquidation. To prevent such a situation from happening, it is necessary for a business owner to make succession arrangements at an early stage in life.
Succession – review your options
This includes acknowledging the very need for succession planning. In the first step, it is important to pinpoint the client’s intentions as regards succession. In many cases, business owners have not come to terms about this with themselves. An obvious option is to have the business run in the family. What are the options here? Is the client willing to opt out entirely? Is the business owner (and their family) financially well off? Is there a designated successor in their own family? Is selling the company or part of it an option to be considered? Do all family members agree?
This is followed by a legal and tax analysis of the (family-internal) succession plan. Can it be implemented at all? Are there any inheritance structures that could be an obstacle? What is the legal company structure and formation?