Succession and Effective Exit Strategies For Family Businesses
Jane Shaw

We have unrivalled expertise advising owner managed businesses on succession planning and exit strategies to ensure the smooth devolution of a business to the next generation or a tax-efficient sale. Planning in advance is critical to secure wealth generated by a family business for the next generation.


We guide clients through the process of planning the most appropriate strategy in their particular circumstances which often includes putting in place structures to mitigate inheritance tax which may arise on the death of the business owner (or their spouse) and tax charges on the sale of a business. We work closely with clients to ensure that decisions are specifically tailored to the nature of their business and their family circumstances.


Tax Efficient Structures

Planning often includes tax efficient will structures maximising the availability of Business Property Relief (BPR), the setting up of trusts to take shares in a family business prior to a sale, shareholder agreements and life insurance/cross-option arrangements to enable executors of a deceased shareholder to sell their shares back to the existing shareholders so that the business can continue to run.


Exit Strategy Suitability

The suitability of a trust, shareholder agreement or cross option depends upon the family objectives and the structure of the business, for example, whether one family owns the entire business or whether it is split between two different families.  Trusts are often especially useful where some children work in the business and others do not, as in this case the business owner may wish to separate control of the business (the making of day to day decisions) from economic ownership (who receives dividends or sale proceeds).


Tax planning in relation to the sale of a business can make a big difference to the value that is ultimately extracted for the family. Shares in a trading company qualify for BPR which is a valuable relief from Inheritance Tax. Once there is a binding contract to sell the business this relief is lost. It is possible to make gifts of assets which qualify for BPR to a trust prior to a sale without an upfront charge to tax whereas cash sale proceeds cannot be put in trust without an upfront charge. It is therefore often sensible to put a proportion of a business owner’s shares into a trust prior to a sale if he wishes to make long-term provision for the benefit of his family.

Our Role

We look at each client’s individual circumstances such as the risks of divisions within the family, the extent to which he wishes to give away any value of the business to reduce liability to Inheritance Tax or how the business would operate post-death without the owner. We have significant experience advising entrepreneurs and owner-managed businesses on tax and estate planning to ensure the value of the business they have built up during their lifetime is protected for their family in the future.


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