kirstie McLellan Day kirstie McLellan Day - The MOMpreneur

legal issues
Passing Your Business
to the Next Generation
The Top 5 Factors to Consider
By Lynne Butler
What does it take to transfer your business to your children?
This is one of the most important business decisions you
will ever make and it can be overwhelming. If you are like
most business owners, you want the transition to be as
smooth as possible. You want to know there are no legal or
tax surprises lurking in your future. Most of all, you want to
ensure that your child has the best possible chance of being
successful in the business. The five factors discussed here will
get you started.
1
1. Finding the right successor
No doubt you’re as proud of your child’s “A” in math or her
ability to hit a home run as any other parent. It’s perfectly
natural to be biased in favour of your own children most of
the time. But when it comes to deciding whether or not your
child might be the right person to take over your business,
you are going to have to stand back and assess your child
objectively. Most parents don’t find this easy to do. It’s
particularly tough when you have more than one child who
might be interested in the business and you have to measure
one against another.
The key to choosing the right successor among your children
is to avoid making any of these three common assumptions:
• Your child wants to take over your business. Avoid the
assumption that because one of your children works in
the family business they want to run it after you retire or
pass away. Talk openly with your child about your goals
and wishes for the business. Ask your child to be equally
frank about her goals. Don’t be afraid of getting a blunt
answer; it’s essential to know where your child stands on
this question.
• Your child is capable of taking over your business.
While it’s possible that your child is perfectly capable
of running your business, it’s a mistake to assume this
without any real grounds for being certain. If the candidate
for the job were a stranger, you would look at her skills,
experience, goals and attitude to figure out if she is capable
of running your business. Try to be equally objective about
your own child.
• Your children will get along if they run the business
together. If your children do not get along particularly
well now, there is no reason to assume that things will
38 MOMpreneur ® � July/August 2010