SMEs Need Clearer Succession Strategies

Almost two thirds of bosses at the UK’s smaller companies intend to pass their business on to a family member when they retire.

The results from a survey by Close Brothers Asset Management also reveal that just under half of the 837 companies questioned said that the businesses will be handed down to children.
 
Despite many business owners knowing what they want to so with the business on retirement, 45 per cent had no strategy in place to extract profit from their firms when they retire.
 
In addition to many business owners admitting to not having considered the tax implications, the research found that less than one in 10 didn’t understand the process.
 
Patrick Haines at Close Brothers Asset Management, said: “It’s encouraging that the majority of SME owners plan to protect their business and its heritage, preparing children or family members to take over at the helm.
 
“Business owners need to ensure they have the relevant plans in place to maximise profit from their business when they retire to help fund their retirement. The hard work that goes into setting up and running a business can be lost if proper planning isn’t in position when approaching retirement.”

Expert Opinion

There are more than three million family-run businesses in the UK and succession planning is a huge issue for many of them. <br/> <br/>“In addition to the tax implications, there are a host of other issues which need to be thought through to ensure a smooth transition. It is vital that the previous owner extracts what value they deem appropriate from the business, but also that the new owners are strongly placed to take the business forward. <br/> <br/>“To ensure this happens, there are a number of important legal issues which are often overlooked and it is vital that appropriate professional advice is taken at an early stage.” <br/> Fergal Dowling - Partner