Families in Business: Next generation planning

Adam Bradley

Partner, Mishcon de Reya

Planning for the next generation as a family business is much more than a legal formality.  It’s a strategic move or should be, to ensure the longevity of a business and its success, often in a dynastic way.  Many family business members work to a great age making the decision to step back or not to a challenging one for everyone.  It is all about finding the right balance of control and ownership and transferring wealth if you can do it in a tax efficient manner. 

To create an effect of a structure within the company with different classes of shares for example, can help manage this transition smoothly to give all stakeholders something to aspire to or something to hang on to and also without wanting to be too negative, the delicate subject of relationship breakdown also does need to be anticipated, both among the original family group but also against potential divorcing spouses becoming shareholders which is exactly what you don’t want to have happen in what’s still a family business.

But also what about non family members where professional managers are brought in to manage a family business.  For example, offering them shares with limited voting rights can offer them some skin in the game and an incentive beyond just a salary or bonus you know, however generous those might be and to delve deeper into these strategies and more, click the link in the description below to read the third article in our Families in Business series.