Attorneys’ Office Lindblad has assisted entrepreneurs and companies in several, successful change of generation procedures.
On one hand change of generation means a situation, where the business is transferred to new owner inside a family or to immediate family. On the other hand an elderly entrepreneur can give his business up for an outside successor through acquisitions or restructuring.
Be prepared for a change of generation
It is reasonable to take the generation change into account early enough and prepare oneself for the demanding procedure of change of ownership.
Choosing successor and securing the livelihood of the former entrepreneur are among other things important matters, which should be carefully planned and discussed with a specialist. It should be borne in mind that change of generation has the same kinds of risks as any corporate acquisition.
Mapping the options
Clients come often to our office thinking that the only alternative for change of generation is trade or gift. Mapping the facts often indicates that it would be more sensible to conduct the change through dividing the business or through acquiring own shares and share issue in pursuance of purchase.
Choosing of modus operandi has an impact e.g. on whether the “purchase price” is paid by the company or by the buyer, or whether the company, dummy company or the successor will be liable for the possible debts caused by paying the purchase price. Through right operations models it is possible to arrange income from rents for the former owner or organize other income sources for him.
There are also usually a lot more financing alternatives than only a bank loan.
Valuation of the company is often an important and essential part of mapping. We have systems for cost-efficient valuation in use.
In any case it is important to find out in advance the taxation treatment of the MO to be chosen, and also choose the appropriate technical solutions.
Some options include tax reliefs which should be taken into account in comparison of alternatives.
We assist in selling outside
If there is no person in a family who is willing to continue the business, we have assisted our clients also in other arrangements in order to enable smooth change of ownership.
We assist in
matters related i.e. to
- change of generation within family or to an outside successor
- restructuring and M&A in change of generation
- securing livelihood of the former entrepreneur
- taxation in change of generation