18th July 2024 ❘ Legal News and Commentary
Leisure and Tourism – Succession planning
Leisure and Tourism – Succession planning
Michael Walby, our Head of Corporate, sets out his recommendations for selling or handing over your business. Michael and our Corporate team are very active in the leisure and tourism market and have advised on the acquisition and sale of a significant number of businesses in the sector.
A recent Armstrong Watson Family Business Report found that more than 52% of leisure and tourism business owners plan to exit their business within the next five years, but a large number have no plan as how they will achieve it. Aside from a few exceptions, most business owners only get to exit their business once, so it is important to ensure that the exit is successful, whatever form it takes. The three main routes to exit we tend to see in the sector are:
- Passing on the business to the next generation of family
- Sale to existing management teams (or management buy-out/ MBO)
- Selling on the open market to a third party
To ensure a successful exit, whichever route you choose, one key theme applies – plan ahead. Each route comes with its own careful considerations, and we can’t emphasise enough the importance of exit or succession planning:
- for the business – to ensure a smooth sale or handover, and to protect the legacy you have built, and
- for you – to maximise value, secure the best deal, minimise any liabilities and save tax
It is often too late to put issues right when it comes time to exit, so it is important to take the right professional advice now to avoid any unwelcome surprises. That will allow you to deal with issues in advance of sale, rather than during the negotiations, which often leads to negative feeling, delay, indemnity requests, or worse – a price reduction. We have seen the same issues come up on a number of transactions in the sector, and can advise how to avoid, or at least minimise their impact. Business owners can also take advantage of significant tax benefits by putting steps in place now, but it is important to seek early advice as some steps can take time to have effect.
In summary, we recommend that you start thinking about your exit strategy now, put a plan in place, and speak to professional advisers who have been there before and know the process. They will certainly add value.
If you are thinking about selling your business, we can help – just get in touch.