Running a family business can be all-consuming, but taking time out to plan for the future is important, and doing this properly is the key to successful succession planning.
However, what many might not think about is the importance of obtaining independent legal advice, to safeguard personal interests and those of the business. In this article, we look at family business succession planning, what happens when you do not plan, and the advantages of parties getting separate legal advice.
Family businesses are different from other types of business because, on top of the day to day running of the business, family dynamics are also a factor. Family business succession is the process of passing on ownership and management to the next generation. Without adequate succession planning in place, it can lead to uncertainty, conflict and disruption within both the business and the family further down the line.
If your business is in its infancy or your children are still young, you may feel that you’re not at the stage to start planning for the future; however, it is never too early to start succession planning. Preparing early on means you will have the necessary plans in place when the time comes to make these important decisions, with roles and business structures already agreed upon.
Getting specialist legal, family and business advice as early as possible is vital in ensuring that your business flourishes for future generations and your family relationships remain intact.
Regardless of the size of the business or the industry you operate in, many families face the same complications when succession planning. Some of these common conflicts and difficulties include:
These, amongst others, are common challenges when family business succession planning and therefore getting your own legal advice can help minimise these.
When difficult decisions need to be made, and plans have not been put in place effectively, significant claims can arise that threaten the very existence of the family business and lead to the breakdown of close family relationships.
You might be hesitant to seek your own separate legal advice when succession planning in case it creates any animosity amongst the family. The Law Society of Scotland has clear requirements around the issue of conflict of interest. You should not be afraid to seek separate legal advice, as it could become important in the long run in terms of safeguarding your own interests, and it may also be what is best for the future success of the family business.
If this article has raised any questions or you would like to talk about a family business matter, then please get in touch using the enquiry form or call us on 0131 225 1200. You can read more of our recent family business Insight blogs here.
Murray Beith Murray was established in 1849 as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day, as does our commitment to be here when you need us.