Good preparation for business succession

Good preparation is essential when transferring your business. Is your business ready to be handed over, or is it still too dependent on you? What do you still need to arrange before your business can continue without you? The transfer to the next generation typically takes around five years. Start in good time to ensure the process runs smoothly. Many clients do not realise beforehand that this journey can take quite a long time.

Do you already know when you would like to transfer your business and what your view of the future is? Do your children want to succeed you, or do they have other plans? You can only answer these questions by having open conversations with your family.

In practice, I regularly see entrepreneurs assume that their eldest son will be the successor. But discussions with the children often reveal that, for example, the youngest daughter also wants to play a role and is capable of doing so. It is therefore crucial to start the conversation, express expectations and assess them together.

Within the family, different interests may arise around the transfer of your business. Who can acquire shares, for example? Is this limited to children with a role in the business? Or can any child acquire shares, regardless of their involvement? And what arrangements will you make for children who do not want a role in the business?

Answer these questions as a family. Do this in a structured way and with the support of a specialised adviser. This helps prevent strained family relationships. You can then have the agreements recorded in a family charter. In my experience, the process of creating a family charter — as well as the document itself — helps entrepreneurs build support for the succession. Every family member can share their views and gains clarity about their role in the business.

Once it is clear which of your children wish to take over, they need the opportunity to prepare for their role. A so‑called development assessment can help you and your successors understand which skills the successor already has and which skills could be further developed through the right knowledge, talents and training. This enables you to create a development plan together and establish a realistic timeline for the succession.

It is not only the successor who needs to prepare for the transfer; you also need to prepare mentally. I recently spoke to an entrepreneur who had decided to go travelling for three months. “The best decision I could have made,” he said. “By literally taking a step back, my daughter had the space to take on her role.”

Think about your wishes and goals even before the succession takes place. Will you, for example, be able to live the life you want, with sufficient means, once you transfer the business? How much does your business need to generate to make this possible? If your business owns a property, do you want to sell it together with the company, or would you prefer to rent it out? In a Wealth Plan, we can calculate different scenarios for you. This gives you a clear picture of the minimum sale proceeds required to maintain your desired lifestyle.

Knowing how much the sale must generate for a financially secure future brings peace of mind when determining the sale price. It also helps you understand whether you can support your children, because you may not need to ask the highest possible price for your business. Entrepreneurs often tell me how pleased they are with their personal Wealth Plan. It provides clarity and peace of mind about their financial situation.

Transferring your business is an important step for you, your family and your company.