NITA MARU ON THE IMPORTANT STEPS FOR SECURING YOUR BREADWINNING FAMILY BUSINESS IN CASE OF TROUBLES
In my line of business, I am often found quoting the words of American author and academician John M. Richardson, Jr. Marked by innate simplicity, it is as simple to practice as it is to preach: “When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened.”
If you own or co-own a business or professional practice in the UAE, to which your commercial space is irrevocably tied, it is important that you plan for its future, before someone has to sit back and sigh over what went wrong.
As a business owner, a significant portion of your wealth, and possibly your family’s main source of future income, will be tied up in your business. The success of your estate planning is dependent upon this business being transferred smoothly, or sold to a third party at a fair price. Either way, it takes considerable planning and preparation, and should be ranked high on your priority list. There are numerous issues to consider which will affect your business in case of an emergency. Without adequate planning your business may be negatively impacted or forced to close prematurely.
Average global statistics estimate that less than 30% of family-owned businesses survive to the second generation, and less than 12% to the third. The survival rate for the fourth generation is a meager 3%. The obvious question: Why?
The first reason is straightforward; there is no qualified successor. The second major reason is more unfortunate. In many cases businesses fail or are sold off due to a lack of planning. All successful businesses, whether sole establishments, partnerships, LLC’s, or free zone corporations should plan for the eventual transfer, succession or sale of the business.
If you don’t seriously consider succession planning, you simply cannot be sure what will happen after you: whether your family will be provided for, who will look after your business, and when and how your beneficiaries will stand to benefit from your estate.
Planning your business succession is an intuitive process, not an event. The process will also vary based on the number and diversity of issues involved. Consequently, each case has to be studied and evaluated independently.
Planning for the future may be a complex process; lawyers not only offer professional advice but also can assist in creating bespoke solutions such as wills, buy-sell agreements and offshore structures to safeguard your family and assets.