Succession and exit planning guide for business owners

If you are the owner of a family business or other private enterprise, there will inevitably come a time when your thoughts turn to succession or exit. Who is going to take on the business after you and what does the long-term future hold? It may be that you want a clean break, retiring completely. Or you may want to step back from the day-to-day running of the company and free up more leisure time. Perhaps you’re looking to de-risk by gradually reducing your involvement while retaining value. Or maybe you want to completely cash out value from the business and pursue other ventures.

Whatever your situation, there are a number of options to consider. This can be complex and nuanced, dependent on the specifics of your position.

In this guide, we will walk through the main options available to business owners with a focus on how they work, the pros and cons of each one and some practical tips for success. We will also consider the all-important question of wealth preservation attached to succession or exit – including the liabilities that arise and ways of structuring your affairs tax-efficiently.

The five succession and exit options we cover are:

Succession

Handing over the family business to another family member (or members), which is often likely to be someone in the next generation, such as your children or other close relatives

Employee ownership

Giving employees in the business a significant and meaningful stake in the company. This is often in the form of an employee ownership trust (EOT) which gives them collective ownership without requiring individual investment

Management buy-out (MBO)

Passing control of the company to the existing management team, who buy all or part of the business. It’s an internal transaction and transition that allows the current owner to exit or step back

Trade sale

Selling the business to another company, typically one operating in the same or a complementary industry. This could be a full or partial acquisition

Members’ voluntary liquidation

Winding up the business and selling off its assets may be the most appropriate course of action when there’s no viable succession or sale option, or when the business has simply reached its natural conclusion.

Planning ahead

Whatever route you ultimately choose, the key to a successful succession or exit is early, considered planning. The decisions you make now can have far‑reaching implications — not only for the value you realise, but for your family, your employees and the long‑term legacy of the business you’ve built.