The survival of a business does not always depend on its profitability; sometimes failing to have a succession plan in place can lead to its downfall.
As businesses brought in the New Year, thoughts will have turned to getting affairs in order. Sole traders and main shareholders in private companies especially, will have (hopefully) turned to their solicitors to plan for succession.
Otherwise, a death of a main shareholder could have an enormous impact on the continuation or future success of a business.
Interests in a business are treated as part of an estate and dealt with by a will – or in the absence of that, an intestacy. It is possible to appoint specialist personal representatives as executors. They can have extra powers in a will to enable them to manage the business properly, and manage any pressure from competing beneficiaries with different interests in the estate. It can also allow other assets to be used to help keep the business running until it is sold.
If the business is structured in a partnership, there needs to be an agreement in place to cater for the death of a partner, as well as other contingencies.