Business succession always has big consequences. It’s not just the ownership of the organization transferring into new hands – a lot of other things change, too. You might not want to give up all the control straight away. And is there some way you can transfer the business without settling up with the tax authorities all at once? Then, there’s so much to be arranged in terms of bookkeeping and tax accounting. Weller can point you to the best way through all that.
You can pick the right moment to step aside and hand the business off to someone else. But unexpected situations can still arise. The day may come when you are no longer in a position to hold the reins of your business. This is something you need to anticipate and plan for ahead of time. Whatever the situation, business succession is always a complex process. And sometimes a very emotionally charged one as well; but at least we can help you handle the business side of things properly. To guarantee that your business will go on.
Succession of DMS (director/major shareholder)
The moment will come when the question of who will succeed the director/major shareholder comes up. All too often, we see that when it comes, there hasn’t been enough thought given to it. Or the succession issue is postponed for too long, and then suddenly the DMS has become ill, or has already died. We cannot stress strongly enough how important it is for your business to make proper arrangements on the succession, and to do so ahead of time. Research has shown that it takes an average of seven years to complete the entire process of business succession, whether that succession is to the next generation of a family business, replacement of current management, or the search for an external buyer.
Of course, succession in business is more than just a business process. As a DMS, you put your heart and soul into building your company. You want to leave it in good shape, and be able to walk away knowing you’re leaving it in good hands. Ideally, to a successor you can trust. Finding such a person is no easy task. And once you have found them, there is so much to take care of on the legal and tax fronts. On top of this, you have to give the successor plenty of time to prepare for the transfer and to get to know the business. Only then can the actual transfer happen, and can you finally step away as DMS. None of this is going to be easy, even in the best of circumstances. Weller is there for you!
When you transfer your business, your buyer is usually going to pay in instalments. But despite this, you have to settle up with the tax authorities immediately. How can you avoid this? If you sell the shares in your private company from your personal holding, then you will only pay taxes on them when you cash out the revenues from the sale to yourself in personal capacity. And you can decide when to do that. In the case of a sale in exchange for profit entitlement, you only pay taxes when you receive the payment. You can also transfer the undertaking in the form of the issue of cumulative preference shares. In this case, the current value of the undertaking is converted into cumulative preference shares issued to you. Your business successor acquires ordinary shares that carry an entitlement to the future value development of the undertaking. This is one way to avoid immediate settlement with the tax authorities. Don’t want to give up control right away? Then the best solution would be either to place your company’s shares in a trust office (the Dutch stichting administratiekantoor, or STAK) or to issue a priority share. Weller can give you expert advice about these and other issues.