Handing your business over within the family

If you are in your fifties, you are particularly wise to be asking the question. You will markedly improve the chances of a successful handover by planning it in advance, and the usual recommendation is to start three to five years ahead.

Handing over a family business has two major dimensions, and you have every interest in keeping them apart and dealing with them separately: an estate dimension, where you want fairness towards all your heirs, and a management dimension, where you are looking for the company’s next boss.

On management: one person in charge

Remember one thing: shared power rarely works. One of your heirs has to stand out and establish themselves as the boss.

To that end, be strict and demanding. The chosen heir must first want it, and say so. Then they must be a rare bird, combining a whole series of qualities: vision, standing that is recognised within the company, emotional intelligence, genuine skill in handling people. They must know how to set objectives and how to delegate.

Ask the company’s friends for their view, to help you make up your mind. And once your decision is taken, explain it and communicate it to everyone, clearly and without ambiguity.

On the estate: complete fairness

It is essential to guarantee complete fairness, both real and perceived. Do not hesitate to ask whoever takes over the running to buy the company, even if that means offering them payment terms: it will simplify a great deal. But have the purchase value confirmed by an independent expert, and involve all the brothers and sisters in the process.

One tip: separating the property from the business itself often makes things simpler. The property can stay in the common inheritance, providing secure income for everyone, and the cost of buying the business becomes more manageable.

Set a date

Then set a date for stepping down. It might be around 65, a little more or a little less. But above all, never wait until you die. And why not do it early, enjoy life, and let the next generation take the controls?

Worth remembering

• Plan well ahead.

• Preserve fairness in the estate.

• Communicate, and be transparent about your choices.

• Avoid shared leadership.

• Settle every detail in advance.

These are only a few considerations, but they will help you reduce tomorrow’s problems, while you wait to tackle the ones after that.

Nady Bilani