SUCCESSION PLANNING

Any large transaction involves a number of constituent moving parts that need alignment. With any merger, acquisition or succession plan, the focus needs to be on the final objective, which invariably is to deliver an era of greater benefit for the business/its owners.

Stephens Scown LLP has helped hundreds of businesses to deliver the sought-after benefits. Trade sales, MBOs with external finance, listings and other structures are recurrent themes in the life of a corporate lawyer. But as an employee-owned business and specialist employee-ownership advisers, we can explore attainment of those objectives through a different route. Take some statistics from the Employee Ownership Association: the top 50 employee-owned businesses have seen a 4.6% increase in sales, a 25.5% increase in operating profits year-on-year, and a 4.5% increase in productivity year-on-year. Growth ambitions and succession planning may well be achieved through more traditional mergers and acquisitions, however the evidence shows that an employee-owned acquisition can be persuasive. Stephens Scown LLP has advised on many acquisitions, mergers, disposals and helped with succession planning, especially amongst family businesses. Since transitioning to employee ownership ourselves in 2016, we have plenty of experience in the employee ownership arena and can provide advice on options for business owners looking to embark on the next chapter of their business.

STEPHENS SCOWN LLP HAS SUPPORTED THE GROWTH, SALE AND PURCHASE OF OWNERMANAGED BUSINESSES AND SMES ACROSS THE SOUTH WEST AND FURTHER AFIELD. HERE, GAVIN POOLE OFFERS A DIFFERENT PERSPECTIVE FOR THOSE SEEKING TO GROW THEIR BUSINESS.

Gavin Poole specialises in the purchase and sale of businesses (via an employee-ownership model or otherwise) at employee-owned law firm Stephens Scown. The team has top rankings in legal guides Chambers and Legal 500. For more information please call Gavin Poole on 01872 265100, email g.poole@stephens-scown.co.uk or via www.stephens-scown.co.uk

MERGERS AND ACQUISITIONS (M&A) ACTIVITY IN THE SME MARKET IS DRIVEN BY A RANGE OF FACTORS, MOST OF WHICH ARE UNDERPINNED BY THE DESIRE TO BUILD VALUE, SAYS ANDY HAWKES, CORPORATE FINANCE DIRECTOR AT BISHOP FLEMING.

The initial challenge for decision makers when appraising a target acquisition investment is to truly understand the value drivers in the combined business. The next hurdle is then ensuring that post-deal, those drivers underpinning the value are genuinely capitalised upon.

Most business combinations create an ideal situation to overhaul existing practices within both the target and the acquiror. Introducing new approaches such as zero-based budgeting can help to remove entrenched inefficiencies and build value.

It is important that decision makers critically consider their organisation’s ability to implement such strategies in order to avoid the all too common situation where cost savings or sales volumes are overestimated, and the deal fails to live up to expectations.

This risk can be mitigated by undertaking the appropriate due diligence, taking the anticipated synergies into consideration. Benchmarking against competitors and other industries using a mixture of financial and non-financial key performance indicators is then an effective method of monitoring the deal’s success.

Bishop Fleming provides a comprehensive range of corporate finance advisory services. For acquisitions this includes target searches, fundraising, financial modelling, due diligence and post-transaction acquisition integration.Integration, oversight and change management programmes are then crucial to delivering the value in the business combination. The managers and teams delivering these programmes should be motivated to

deliver the synergies with realistic targets and appropriate resources. Focusing on these areas can allow businesses to maximise and deliver the value potential of the deal.

For more information, contact Andy Hawkes, corporate finance director, on 01392 448800 or ahawkes@bishopfleming.co.uk

AFTER CAREFULLY GROWING A BUSINESS FROM SEED, NO-ONE WANTS TO SEE THE HARVEST SPOIL: JANE DRUMMOND FROM ATC ADVISORS BREAKS DOWN THE KEY QUESTIONS TO ASK WHEN IT COMES TO SUCCESSION PLANNING.

Handing over property or shares will give some degree of control to that person, and you have to be ready to let go.

Children are often the first choice, but may not want to be involved in the day to day running of the business. Shares encourage employee participation, but might not guarantee fidelity. We don’t have a crystal ball, but we do talk you through the impacts and options. Our goal is to make sure you are happy with who you’re handing your business to, and how.

If looking at giving assets, it is important to review what you need to retain to be able to maintain the standard of living you want.

We look at the bigger picture - where you are, where you want to go, and how you want to get there - to ensure that any planning undertaken meets those needs throughout.

Last-minute decisions may not achieve your full intentions, and those actions risk a potentially large tax bill. The seven-year window for Inheritance Tax purposes is well-known, but there are also annual exemptions. Rome wasn’t built in a day, after all – starting sooner maximises options available. Our Capital Taxes and Business Planning teams work in tandem to create a regularly reviewed strategy to suit your evolving requirements and changing legislation.

Jane Drummond is Tax Manager at ATC Advisors. To discuss any issues raised in this article, please call 01566 772177 or email office@atcadvisors.co.uk.

Business owners are often fiercely driven individuals committed to the success of their company, working incredibly hard on a day-to-day basis. It is not surprising therefore that planning for what happens to the business on death often falls off the radar.

However, putting in place a will that makes provision for business is a vital component of guaranteeing its future viability for coowners and employees and, arguably most importantly, protecting the inheritance of one’s family.

• If your business is a partnership or limited company, is there an up-to-date Partnership

Agreement or Shareholders Agreement that includes provisions for when a partner or shareholder dies? Business owners will often agree to put in place specific options that will enable them to purchase the interest of a co-owner on death and this is usually linked with life cover that can fund the purchase from the estate.

• Who to appoint as the executor of the will. If the estate includes business assets, family members may not be best placed to deal with decisions relating to the business and it may be sensible to appoint at least one executor who has experience or expertise in this regard.

• Is your business and will properly positioned to ensure that the benefit of Business Property Relief (BPR) (a valuable relief from Inheritance Tax) is fully maximised? BPR applies to qualifying business assets (broadly speaking, business interests or assets in an acting trading business) which have been owned for at least two years prior to death. BPR provides a relief of either 100% or 50% on the value of the business depending on the circumstances. A will can be prepared that ensures that BPR is not wasted.

• Are there specific administrative powers in the Will that will enable your executors to ensure the smooth running of the business while the estate is being administered?

RRL Wills is a niche legal practice focussing on wills, trusts and powers of attorney. Together with our sister company, RRL LLP which provides business and tax advice from its team of chartered tax advisers, we are able to provide a comprehensive service to business owners looking to ensure the implementation of succession planning in the most tax effective manner possible.

If you would like to discuss the issues raised in this article or to talk about updating your Will, please contact Nick Latimir on 01872 276116 or email nick.latimir@rrlwills.co.uk Nick is a solicitor and member of both STEP (Society of Trust and Estate Practitioners) and Solicitors for the Elderly.

In our current climate of enduring skills shortages – and with research suggesting a lack of confidence in leadership potential within the existing workforce – interest in succession planning has been revived. The Cornwall and Isles of Scilly Skills Hub offer some advice to help you move forward.

Succession planning was previously, perhaps, something thought of only within family businesses, as the next of kin worked their way up their respective organisation’s ladder to take over from a fellow family member. But now succession planning is something that goes far beyond just that.

Organisations who value their employees know that they need to invest in professional growth. And, conversely, employees need to see a future of promise and opportunity. Succession planning is just one example of how to achieve this.

Modern succession planning looks quite different to that of the past, with a broader vision, greater openness and diversity, and closer links to wider talent management practices. Progressive organisations who adopt an inclusive, whole workforce approach to managing and developing talent, will identify business critical roles at all levels within their organisation.

Developing business leaders of the future – particularly promoting and fostering the leadership attributes of those from within an organisation – is the new ‘done’ thing.

What can you do within your organisation to ensure you’re better prepared for a smooth transition to take place?

Well, the Cornwall and Isles of Skills Hub are here to help with a selection of key tips.

We would like to think that you already have plans in place for regular training, learning, and skills development opportunities. However, if recent data is anything to go by, this might not be the case. According to research conducted by independent think tank the Learning and Work Institute, spending on employee training has fallen 28 percent since 2005, with the overall proportion of employees receiving training within their workplace falling by 14 percent in the same period. Further research from Deloitte also shows that, despite growing investment in leadership development, improvement in the quality of leadership has stalled.

What can you do to turn the tide? Get your team up-skilled, re-skilled, or create an ethos within your business that places training and development at the top of your to-do list. Identify those within your organisation who possess leadership and management attributes and link them with the right training to help them develop and grow.

The Skills Hub can help with this, and more.

As far as succession planning goes you should employ a strategy that ensures each employee is considered a ‘key’ member of your plan. A succession planning strategy that focuses solely on senior leadership will be narrow, so map the talent within your team (and the gaps too)and identify those who you believe could make a future leader.

Progressive organisations built for future ways of working adopt an inclusive, whole workforce approach to managing and developing talent, with the ability to identify business critical roles at all levels within their organisation.

Take the time to talk to your team – and don’t make assumptions. Find out your team’s vision for their own future because finding out what they want in the short term can help you retain staff in the long term.

No one likes being left out of the loop, and there is nothing healthy about a severe dose of FOMO. As with most aspects of business, communication will make any succession planning strategy much smoother.

If you have managed to identify a successor, be sure to keep your team in the loop. And keep your successor abreast of your plans, too. Would you believe it if we told you that research shows around 25 percent of those employees in line to take over a small business weren’t aware that they themselves were being chosen?

Of course, your plans for the future might not always be well received. Some employees might feel as though they have been overlooked, so ensure that an open, two-way communication channel is established (however big or small your business may be) that allows for open, honest dialogue to take place.

Contact the Cornwall and Isles of Scilly Skills Hub; the independent and impartial specialists when it comes to all things skills, training and workforce development. We can equip you and your team with the skills needed to ensure that you’re ready to tackle whatever comes next for your business. Succession planning or otherwise.

www.ciosskillshub.com – 01209 708 660