Advisory services on succession

Anyone seeking to maintain and increase a family fortune necessarily puts long term considerations at the forefront of his planning objectives. Part of this planning is thus devoted to the question of succession when the time comes to pass the baton to the next generation. Every investment must take the possibility of the unexpected into consideration.

A death within the family can result in very high inheritance tax charges. It is therefore advisable to devise from an early stage asset management and investment strategies that ensure the availability of sufficient liquid assets to meet high inheritance tax demands.

An important aspect of succession planning is therefore tax planning to reduce or avoid the potential charge to gift or inheritance tax at home or abroad with a judicious investment or asset management strategy.

An early start to succession planning facilitates the best use of any tax planning options open to the family, or of the concessions available. This particularly applies to business assets, where it may not be possible to meet a heavy tax demand at short notice without compromising the business' liquidity or other family interests. Indeed, inadequate succession planning is a common cause for failure to carry over a family business into the third generation. The priority is to act in time and to arrange a smooth transfer from one generation to the next.

Our asset succession planning services also focus on other areas. Thus advice on trusts is often part of a comprehensive international succession planning service. Emigrating to another country of residence is also an aspect worthy of consideration for many. Together with the lawyers, PwC Legal AG, PricewaterhouseCoopers (PwC) can also arrange for appropriate marriage contracts, wills and settlements, taking international considerations into account.

The problem:

Succession is a fundamental question, particularly for family businesses. It is essential for proprietors to have a clear perception of the succession issue, if they are to ensure the long-term future of the business. The burden of finding a way to transfer a business operating in a dynamic environment to a successor without putting its success in jeopardy is a major responsibility. Business succession needs to be planned over the long term, designed carefully and implemented just as carefully.

How we work:

Preferably at an early stage, PwC designs an effective approach to succession, tailored to the individual requirements of the business and the people involved. This considerably increases the prospects of a successful business succession.

PwC sees due consideration of the legal and commercial aspects of the business at both the design and the implementation phase as crucial to a successful transfer.

PwC's expert advice brings the following advantages:

• In-house definition of the required profile for the successor
• In-house training and preparation of the successor for his future responsibilities
• Liquidity requirements can be planned for and suitable measures taken
• Flexible structure allows other options: recruitment of a salaried manager, sale of the business (e.g. MBI, MBO) or taking in another investor
• A sturdy business organisation will increase its attraction to a qualified outside manager
• A convincing succession plan will improve the business's risk rating with the banks, thus opening the door to further finance when needed
• Once the business succession is secured, there will be a firm base for disposing over the remaining family fortune.

Whether the objective is succession within the family, withdrawal of the family to a passive shareholding position with day-to-day management in the hands of an outside director, or a complete or partial sale of the business, PwC will put its expertise at the family's disposal.