Business succession can prove to be a crucial issue, especially in the case of family businesses. That is why the matter ought to be dealt with as early as possible.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Business succession can pose a real challenge to businesses, but particularly family-run businesses. It is therefore all the more important to settle the matter early on in order to be prepared for sudden, tragic events such as the death of the head of the company and testator. Should it come to that and no arrangements appear to have been made, not even in a will, the rules of intestate succession shall apply.
However, the legal heirs might not be suited to running the company or simply have no interest in doing so. If there is a community of heirs, then it must make arrangements for succession. It is possible for disputes to arise among the heirs in the process that can jeopardize the existence of the company. Appropriate measures need to be taken at an early stage to prevent this from happening.
The rules of intestate succession can be circumvented by preparing a will or contract of inheritance. In this way, it is possible to designate a suitable successor as heir to manage the business. That being said, it is important to take appropriate account of the claims of the legal heirs. There is also the option of selling the business. Potential buyers could be, for instance, the company’s existing management team, or the buyers might also come from outside of the company.
If the intention is for business succession to stay in the family, it is possible for the transfer of the company to be carried out gradually. Detailed plans to this effect need to be developed that take adequate account of the possibility of there being further heirs. Another potential option is to establish a foundation.
If one is to navigate the complex requirements pertaining to business succession without encountering any legal difficulties, it is not enough to simply obtain the assistance of lawyers who are competent in the field of succession law; they should also have a great deal of expertise in other relevant associated legal fields, such as company law and tax law, and be able to find a suitable solution in close consultation with the client and implement this for the benefit of everyone involved.
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