In the business world, succession planning is often overlooked. Much like writing a will, it feels like something that can be put off indefinitely. Yet for many business owners, their company is more than just an asset; it is part of their identity, a reflection of years of effort and dedication. Ensuring that it continues to thrive beyond the founders' involvement is essential, both for clients and employees.
Succession planning has become an integral part of our practice. Our own journey as a firm highlighted how important it is to start early, not when retirement is imminent but when there is time to think through the best options. The reality is that at some point every founder will step back, and whether that happens gradually or suddenly, the business must be prepared.
There are several approaches available to owners who want to secure the future of their companies without simply selling to the highest bidder. A management buyout, for example, allows key employees to form a company and purchase the founders' shares, often paying over time from future profits. This option can work well in businesses where the people themselves are the primary value, such as professional services firms, and it gives management a direct stake in the company's future.
Another increasingly popular route is the employee ownership trust. This structure, well known in the UK thanks to the John Lewis model, transfers ownership into a trust that holds shares on behalf of all employees. Rather than giving individual employees direct shares, profits are shared among the workforce according to factors such as seniority, length of service, and working hours. For founders who value loyalty and teamwork, this model allows a broader recognition of employee contribution while ensuring continuity of ethos and culture. It also carries tax advantages when approved by HMRC, making it a practical as well as principled solution.
A third option involves growth and freezer shares, which are particularly effective for family businesses. In this model, founders effectively cap their own value at today's business valuation, while allowing future growth to pass to the next generation or new management. It is a flexible tool that can be adapted to dividends as well as share value and can form part of a wider tax planning strategy. For businesses expecting significant growth in the coming years, this approach can be both pragmatic and fair.
What all of these approaches share is flexibility. Unlike an outright sale, where a business is handed over and the founders immediately step away, each of these structures allows for gradual transition. Founders may remain in management for a period, ensuring stability while new leaders gain experience. Employees are given clarity about the company's future and a tangible role in shaping it. Clients gain confidence that the firm they trust will continue to uphold the same values.
The challenge often lies not in the legal structures themselves but in timing and communication. Many founders are reluctant to raise the topic with employees until they are certain of their preferred path. That caution is understandable: uncertainty can cause unnecessary concern. Once a clear plan is agreed among partners, however, transparency becomes key. Employees are more likely to embrace a transition when they can see it has been carefully thought through and when they feel included in the vision for the future.
Succession planning is not just about retirement. It is about continuity, resilience, and preserving the culture and relationships that make a business successful. At Mirkwood Evans Vincent, we work with clients across sectors to explore the right structure for their circumstances, whether that means a management buyout, an employee ownership trust, growth shares, or even a simple sale. What matters most is that the transition reflects the values of the founders and secures the business for the long term.
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