Exit option: Family Succession

Passing or selling the business you've set up to a son, daughter or other family member can be an attractive option. It allows you to maintain an involvement in the business and pass the assets to your hetaxing authorities.

If you're interested in a family succession as an exit, you'll need to identify a potential successor and focus on developing their skills. It can help to involve your children or other relatives in the business as soon as possible, allowing them to gain an in-depth understanding of how things work.

Allowing them to gain experience working in other businesses can be equally important, as this will give them new strategic insight into your activities.

However, you should bear in mind that you can't be certain that a child or other family member will definitely be interested in taking the business on in, say 20 years' time. If you're starting a business with the clear aim of passing it on to family, you should seriously consider how you could interest the relevant family members right from the start to reduce the possibility of them pursuing other options.

Get advice

A third party such as a non-executive director or business adviser can help you ensure emotions don't cloud your thinking.

They can help you to answer key questions such as:

• Will family succession set up the potential for conflict within the business or my family?
• Will it provide for my future financially?
• Will it be tax-efficient for me?
• How will family succession affect my chosen successor's tax liabilities?
• How do I apportion shareholdings between the successor and other family members?

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