From an early time we decided to give my two sons shares in the business. Although this wasn’t part of a serious succession strategy, one of the advantages of having a good process like this in place is that when I step down and retire (and I don’t intend to any time soon) they have the option of running the business alongside my fellow director Neil Emburey.

    Preference shares

    When we started the business, one of the key things for us was making sure we had the right cashflow position so we started injecting capital using preference shares so there was a loan into the business to create a capital base, so from that we had the liquidity to pay salaries in the early years and so on. In that stage, and even now it was just the four of us: myself, Neil and my two sons: Leigh (our operations manager) and Jonny (trainee financial planner).

    We sat down with a lawyer and looked at share structures and how that would work. Flexibility was our key thing; we needed to have a share structure that enabled us to identify who owned which part of the business, but to be able to flex back as events unfold as individuals impacted the business as it grew.

    So that was a key part of the thinking: not creating a straightjacket, but a shareholding that would accommodate future expanding, growth and change, including individual development within the business.

    Starting the process

    At the beginning there was an incentive for my sons to want to be in the business and help its growth and development, but as they were both new to the industry and business, we also didn’t want it to be a set of handcuffs.

    The share capital originally was myself and my wife owned 50%, Neil and his wife 30% and my sons had 10%.

    As events unfolded over five years, my sons have grown into their respective roles and in the back of my mind I always knew if they wanted to stay in the business and help it grow then clearly I wanted to make sure they feel more involved so we’re in the final stages of signing off their paperwork to increase their shareholding to 20% each, with myself and my wife coming down to 30% which is pretty reflective of a very fair strategy.

    We used  to have different classes of shares so we were able to flex different packages so able to put in money to reflect who was contributing to what level, but we are now equal partners in terms of profitability. We all have different skillsets but now we’re at a point where we feel comfortable we have it the share structure about right for now.

    Looking ahead

    We’re now set to see where the next 5-10 years will take us. Who knows what is down the road – we may get a deal from a super fantastic company buying the business, or we could see me get an earn out deal where I retire and the boys take over from me.

    That’s part of the thinking, Jonny is training up to be a financial planner and Leigh has the operational side so they can act as an entity and there is clearly potential for succession.

    Although I’m not worried about it right now because I’m thoroughly enjoying my work life balance and I see myself doing this for the forseeable future, you never know what happens. You have to plan for the next five, 10 or 15 years and have plans and structures in place so when something happens you can be prepared.

    As we’ve gone down this shareholding route it means that if I decide to retire my sons won’t be saddled with debt to buy me out. This is the sensible, forward-planning option.

    However, you have to be careful about all the rules. We worked with very good accountants and lawyers which I thoroughly recommend, because although it’s easier for us as we have a blood relationship which helps with the tax side of things, moving shares around requires advice and a check at every stage to make sure you’re doing it right.


    To learn more about succession planning and exit strategy for your business, download our white paper 'Planning your exit: A guide to creating a succession plan and exit strategy'

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