When they start their business, most business owners have a picture in their minds of one day in the future when they will be selling or leaving their business and where they want their business to be at that time.
It may be when they can finally sell off their wildly successful business for a profit, and head off into the sunset on their grand retirement adventure, or move onto another new and exciting business proposal.
Alternatively, they may want to build a great family business, a legacy they can happily hand over to their children to look after once they are ready, and take some time to relax, knowing that their children have a great business they can build and grow.
When you started your business did you think about how selling your business or leaving your business would work, and what you could do to ensure you maximised the value of your business?
A client came to us recently with a problem about their family business. A number of family members were shareholders and co-owners of the business. There had been a major falling out in the family, and they could no longer work together to run the business.
The problem was that because it was a family business, they had not planned for things to go sour, and there was no documentation in places as to how disputes would be resolved, how one or more of the shareholders could buy each other out, or at what price.
Ultimately the matter was resolved but it was an expensive exercise for each family member and the company which could have been avoided or minimised if the right documentation had been in place at the start.
As a business owner…
- What plans have you got in place to protect your business and its value, and to make sure that you will be able to sell or transfer your business with the least amount of difficulty and the most gain when you are ready to leave?
- Will your business actually be worth anything without you at the helm?
- Or will you be trying to sell an asset that is just an empty shell without you?
- Have you got the relevant documents in place for your business to operate smoothly, including employment contracts, premises leases, supply agreements, insurances and details of your wishes where an unforeseen event occurs?
It is essential that you plan these aspects of your business to ensure that when you are ready to leave, you can maximise the profit you will be making from your business, with the minimum amount of cost and restructuring required to transfer the business to a new owner, whether a third party buyer, or your children.
If you are a business owner, and want to make sure your business will be ready to move on when you are ready to retire, make sure you contact our Business Law team for an obligation-free initial discussion.