{"id":45518,"date":"2023-10-20T15:44:17","date_gmt":"2023-10-20T15:44:17","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/how-do-i-plan-for-succession-without-creating-a-family-feud-startupsmart\/"},"modified":"2023-10-20T15:44:17","modified_gmt":"2023-10-20T15:44:17","slug":"how-do-i-plan-for-succession-without-creating-a-family-feud-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/how-do-i-plan-for-succession-without-creating-a-family-feud-startupsmart\/","title":{"rendered":"How do I plan for succession without creating a family feud? – StartupSmart"},"content":{"rendered":"
I\u2019m looking to hand my business onto the next generation one day. I have three kids \u2013 how can I best handle it legally so that the assets are split fairly and there aren\u2019t any disputes?<\/b><\/p>\n
<\/span><\/p>\n <\/p>\n Transitioning a business from one generation to the next is one of the more difficult things confronting a family business.<\/p>\n <\/p>\n There are not only the financial, legal and practical matters to consider, but also the emotional issues that make the discussions much more difficult.<\/p>\n <\/p>\n The three elements to successful transition are:<\/p>\n This last point is often exceptionally difficult.<\/p>\n <\/p>\n <\/p>\n Before embarking on any transition it is important to have an appropriate corporate structure in place. You need to see your lawyer and perhaps accountant in relation to this.<\/p>\n <\/p>\n The next step is to sit down with your family members to work out a transition plan including these considerations:<\/p>\n In making these decisions, it is important to have a very clear understanding of the roles that your successors play in the business. Consider whether they have been involved in the business over a period of time and gained a certain level of knowledge and if they will they need external advice.<\/p>\n <\/p>\n Part of the planning process should start a number of years from the intended transition date. This will enable the successors to build their experience and expertise and their relationships with employees, customers and suppliers.<\/p>\n <\/p>\n During those preparation years you can evaluate the performance and gauge the relationship between the successors. This will give some understanding as to whether the succession strategy will actually work.<\/p>\n <\/p>\n In my experience, these practical matters are the most important in any strategy and plan for succession.<\/p>\n <\/p>\n <\/p>\n This issue requires both legal and accounting\/taxation advice together with commercial and practical factors. On the assumption that there is a corporate structure in place, then shares in the business will be transferred to the successors.<\/p>\n <\/p>\n It is strongly recommended a shareholders\u2019 agreement is entered into between the successors to avoid conflict.<\/p>\n <\/p>\n Shareholders\u2019 agreements are relatively long documents that set out the rights of and relationship between the shareholders of the company.<\/p>\n <\/p>\n They deal with issues such as decision-making and dealing with disputes, dividend distribution, selling and issuing further shares, structure of the board, management\u2019s powers and limitations and so forth.<\/p>\n <\/p>\n The issue of shares does not have to occur at any one point in time, you can issue over time so that the transition period is gradual, which can have some advantages going forward.<\/p>\n <\/p>\n <\/p>\n Do\u2019s:<\/p>\n Don\u2019ts:<\/p>\n It is a fact that only around one-third of family businesses survive longer than five years post-transition. If you don\u2019t plan and carefully implement the transition strategy, the chances of the transition surviving will be quite small.<\/p>\n <\/p>\n This was written on James Omond\u2019s behalf by Leanne Scott, senior lawyer, Carter Lawyers.<\/i> <\/b><\/p>\n <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" I\u2019m looking to hand my business onto the next generation one day. I have three kids \u2013 how can I<\/p>\n","protected":false},"author":1,"featured_media":58705,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,14,20,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/45518"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=45518"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/45518\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/58705"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=45518"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=45518"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=45518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n
\n
Transitioning the management of the business<\/h3>\n
\n
\n
\n
\n
\n
\n
\n
Transitioning the ownership of the business and determining ownership\/management<\/h3>\n
3. Some do\u2019s and don\u2019ts<\/h3>\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n