Why retiring from the business also requires a plan for the future

An entire entrepreneurial career culminates in a single moment: the transfer of the business. Whether that means a sale to a third party or the children taking over, the stakes are always high. ‘This means that you should start drawing up a plan at an early stage and take the time to think it through,’ says Dirk Denies, senior wealth planner at ABN AMRO.

‘The preparations often go much further than most entrepreneurs realise. Examples of the possible issues: What assets does the business hold? Is everything transferable? Does the business contain elements such as cash or property that should or shouldn’t be included in the transfer? It’s important to surround yourself with specialists. Every business and every acquisition is unique.’

‘Another crucial question is how you want to transfer the business,’ adds Lara Hadjistratis, head of wealth solutions. ‘Do you want to sell the shares, sell the assets or pass the business on to your children? Bear in mind that if you leave the business to a child, it makes a difference in terms of tax whether you gift it or sell it. The gifting of a family business is exempt from gift tax under certain conditions, for example. This advantage applies in all regions, provided the activities continue for a few more years (three or five).

‘Inheriting a family business at 0% is only possible in Wallonia, although the business activities must continue for at least another five years. In Flanders and Brussels, there’s a stronger incentive to gift the family business during your lifetime.’

‘Personal guarantees are often overlooked,’ says Denies. ‘If you forget to terminate or transfer them, they simply continue, even if you no longer have anything to do with the business. Shareholder agreements or articles of association can also complicate the transfer.’ There may be transfer restrictions, or unanimity may be required for the sale of the business.

‘You must also be sure to make sound agreements about the acquiring discharging you as director; if you don’t do this, you will remain liable for decisions after your departure. A takeover can have consequences not just for the shareholders themselves, but for customers, suppliers and employees, so you should review all contracts carefully.

What if you want to involve your children but don’t want to transfer control immediately? ‘In that case setting up a partnership could be a good idea,’ says Hadjistratis. ‘It allows you to separate ownership and control. A holding company could also be a solution, especially if there are multiple businesses. And what if not all the children have the same ambitions? You could split the business into a property and an operational division, for example. That way, one child can run the business, while the other leases the property.’

Taxation is constantly changing. For instance, the announced capital gains tax could affect entrepreneurs selling their business. ‘Today’s rules could be different in three years,’ warns Denies. ‘We keep clients constantly informed, but no one has a crystal ball. That’s why it’s crucial to reassess your planning – both business and personal – on a regular basis, making adjustments where necessary.’

‘A transfer is never just a financial transaction,’ concludes Hadjistratis. ‘It’s an emotional and strategic process in which tax and legal considerations play a role. That’s why ABN AMRO combines legal, tax, financial, family and strategic advice. And we keep doing this even after the transfer, when the seller wants to put the received capital to work.’