As the new Labour government in the UK may consider increasing capital gains tax and altering business asset reliefs, family businesses are confronted with challenges that could significantly impact their future strategies.
These potential policy changes might compel family business owners to rethink their plans, whether they are contemplating a transition to the next generation or exploring exit options.
Impact of Increased Capital Gains Tax and Changes to Business Asset Relief
The proposed increase in capital gains tax could incentivise owners to sell their businesses sooner rather than later to benefit from current, lower tax rates.
This change could create a sense of urgency for those considering an exit strategy.
Meanwhile, alterations to business asset reliefs could raise the costs associated with passing the business on to family members, potentially complicating succession plans. Reduced reliefs might make it financially more burdensome for the next generation to inherit or take over the business, thus influencing owners to consider alternative routes.
The Critical Role of Non-Family Leadership
In these shifting circumstances, the importance of building a strong non-family leadership team cannot be overstated. A well-established, non-family leadership team can play a critical role in enhancing the valuation of the business. Companies with experienced non-family leaders are often viewed as more attractive to potential buyers, which could help maximise shareholder value.
Additionally, such a team can offer much-needed stability and continuity during times of transition or sale, ensuring that the business remains operational and resilient through significant changes.
Understanding the Distinct Leadership Skills for Transition vs. Sale
It is also essential to recognise the different skill sets required for managing a generational transition versus preparing a business for sale. A leadership team focused on succession planning must excel in nurturing the next generation, ensuring internal development, and preserving the family values that have shaped the business. This team needs to guide the business through a process that balances family expectations with business needs. Conversely, a team preparing the business for sale must possess expertise in optimising business performance, enhancing valuation, and managing complex exit strategies. The ability to handle these distinct scenarios effectively requires specific leadership capabilities, and understanding these differences is crucial for ensuring success.
How TWYD & Co Can Support Your Business
At TWYD & Co, we specialise in assisting family businesses with recruiting top non-family talent to strengthen their leadership teams. Our expertise in executive search and talent advisory ensures that you can find the right leaders equipped with the specialised skills needed for either scenario. Whether you are planning for succession or considering an exit, having the appropriate leadership in place is essential for managing these transitions successfully.
We are here to support your business through these changes and beyond. Reach out to us to discover how we can help you position your business for a successful future, regardless of the path you choose.