Individually owned businesses are mushrooming in all countries of the world. And though the business owner usually starts out to be master of all, the fact of the matter is the business usually outgrows the individual and soon the master turns into the servant in more ways than one.
Succession planning seeks to manage these issues, setting up a smooth transition between present and future owners of the business. With family businesses, succession planning should be a priority. However, it can be especially complicated because of the relationships and emotions involved, and because most people are not comfortable discussing topics such as aging, death, and their financial affairs.
Ownership transitions and estate transitions are two separate forms of succession planning. The ownership transition concerns only the business assets in the estate. In this transition, the focus is on sustaining the profitability of the business. The estate transition, on the other hand, includes consideration of the entire estate, which may consist of both business and non-business assets. Family interests take precedent here and estate decisions will be driven by the quest of equality.
The most efficient means for transferring ownership, which will keep both the family concerns and business issues in balance, should be created. The advice of professionals like financial planners, lawyers and accountants on the family business advisory team is vital and will help keep the business owner in control.
How do you assist your clients in transferring ownership of their businesses?
