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Family business: When talking is taboo

Talking about succession is a taboo subject in too many family businesses, Steven Scarlett, partner of chartered accountants Lovewell Blake, told a business breakfast seminar near Norwich this week.

“The easiest thing is to put off discussing the subject — but this can lead to the wrong assumptions, inappropriate decisions or no decisions at all,” he told more than 70 delegates at the Dunston Hall Hotel event.

With less than one in three family businesses making it successfully into the second generation and only one in ten to the third generation, it was no surprise that less than half had formal succession plans in place.

Mr Scarlett said there were a number of options available for succession — from a gift to the next generation and family buy-out to a trade sale, hybrid solutions and even in the current climate planned closure.

Whatever course, he said, the key was good communication and planning with the benefit of specialist professional advice to achieve the best, tax efficient outcome for the family and the business.

The seminar also heard from John Fuller, former director and shareholder of J & H Bunn, who have been clients of Lovewell Blake for over 100 years. He, together with guest speakers from Birketts, described the lengthy process that led to securing the sale of the Great Yarmouth-based family business founded in 1816 to Koch Fertilizer, a subsidiary of one of the largest US private companies, in March last year.

He said the process included drawing up an information memorandum, setting up a virtual data room on the internet and getting the agreement of 65 shareholders. “All this seemed like overkill at the time, but was necessary to get the best price,” said Mr Fuller.

Lovewell Blake has set up a Family Business Club which holds regular breakfast meetings to discuss topics of particular interest to this sector, usually hosted by a family business. Information can be obtained from Steven Scarlett on 01603 663300 or e-mail s.scarlett@lovewell-blake.co.uk
www.lovewell-blake.co.uk