Almost every business owner would agree that 2020 has been one of the most challenging years. Firstly, Covid 19’s impact on business closures and with the looming impact of Brexit largely still to be felt, who knows what is around the corner? However, as has been said many times before, businesses in Northern Ireland are incredibly resilient and some could even come back stronger. Here, we ask some of the most pressing questions around what will happen to your business should you no longer be a part of it.
For many of us, all of our time and money is ploughed into our business. The hard work and effort that is required to maintain and grow your business, particularly at this time, is worth it because you are building the business for your benefit and the benefit of your families. Although it isn’t something we think about regularly, we need to take time out to think about our eventual exit from the business, whether that be by way of a sale, death or incapacity. Have you maximized the value of the business for the benefit of your family and loved ones? After all, isn’t that what the hard work is for?
Do you have a Will in place that is clear about who should inherit the business, and most importantly, what your views are on what should happen to the business when you are no longer there?
Does the value of your business depend solely or largely on you, in which case, while you have a successful business now, would the business succeed if you died or became incapacitated? If you were to die are your family relying on the income from the business, or being able to sell the business to generate funds that they can use? If so, you need to ensure that the business can survive and thrive without you.
If you became incapacitated you should have a Power of Attorney in place that can make the business decisions that need to be taken on your behalf.
Having a strong senior team in place is very often key to maximizing the value of your business, either on death or on sale. If you have a strong senior team you have options, the business will be valuable and may therefore be sold to a third party. Or, the senior team could continue to operate the business on behalf of your family. If the senior team is running the business on behalf of your family, thought should be given as to how they are remunerated and incentivized.
Would your family and loved ones have the skills necessary or ambition to run the business in your absence – if not does your senior management have the necessary skills?
Whilst having business partners and shareholders means it is more likely that the business will continue in your absence, would your family be able to work with the existing partners and shareholders or should your family have the option of selling your shares to the other owners? Consideration should be given as to how this may work, the price to be paid and timing around payments. We have found that without careful consideration and planning these issues can lead to bigger problems in Family Businesses, where the other partners and shareholders are family members.
Whilst this article has more questions than answers, hopefully you will see that when you have worked through the questions and been able to answer them, you will have a plan that works for you and your family. We at Baker Tilly Mooney Moore are able to work through these issues with you, to ensure you have maximized the value of your business and ensured continuity where applicable.
To talk about your own circumstances contact Angela Keery, Tax Director Tel: 028 9032 3466 or Email angelakeery@bakertillymm.co.uk