LEGAL
Taking the right steps to plan succession options
Family business owners in the East Midlands must consider their succession options as more preferred choice successors choose to take a step back from the business, says Shakespeare Martineau.
Succession planning can be tricky for family businesses at the best of times but constant changes to the family tree as individuals get divorced and re- marry can introduce weaknesses at the level of the next generation. For those affected, important life changes can trigger a desire to re-evaluate their position, which can mean pursuing a change of career. According to research by the
Institute for Family Business, 90% of all private firms in the East Midlands are family owned and for family business owners planning retirement without an alternative member of the family pushing to take their place, this could leave the business owner feeling trapped at the helm.
‘Business owners should make sure they are communicating regularly with potential successors’
Duncan James (pictured), Head of Family Business at
Shakespeare Martineau’s Leicester office, said: “Family businesses are the lifeblood of the region and they face a very unique set of challenges – succession planning being just one of them. “A business owner’s choice of successor deciding
they no longer want to be a part of the family business is becoming a more common occurrence. It may be
possible to bring in an external expert to support the running of the business with a view to taking up the reins. “Making the transition to employee
ownership can also enable business owners to realise value in a tax-efficient way, while preserving continuity. “To avoid being left in the lurch
as exit preparations begin, business owners should make sure they are communicating regularly with potential successors. If an individual’s circumstances change, this could trigger a rethink and it is important that the family business owner is aware of this and can intervene appropriately if they think it might help. To minimise the risk of such disruption to their exit arrangements, business owners should consider taking a preventative approach by taking steps to tie in key family members or highly- valued managers. “One of the best ways to tie in
potential successors and keep them motivated is to put in place a rewarding pay and remuneration package, which comprises an option to assume ownership of a stake in the business, once key milestones are achieved.”
Calls to reform motor insurance industry
The Managing Director of a leading vehicle management company has called for reform of the motor insurance industry so that motorists find it much harder to make minor whiplash claims. Simon Hill, of Leicester-based
vehicle management company Total Motion, wants to see a complete clamp down on compensation pay-outs for all non- serious road accident injuries. He said: “The whole insurance
industry needs to be reformed so that whiplash and other non- serious minor claims are much harder to see through. “Currently, law-abiding motorists
are bearing the cost of inflated compensation claims through higher motor insurance premiums. “It is also time that lawyers and ambulance chasers were given a fixed cost tariff of what they can charge when pursuing personal injury claims.”
52 business network July/August 2017 Simon’s comments come in the
wake of a Ministry of Justice (MoJ) consultation on proposals designed to reform the personal injury and ancillary claims sectors. Concentrating not just on whiplash but all soft tissue injuries resulting from a road traffic accident, the reforms, if made law, would see a radical shake-up of the personal injury claims market. The MoJ is focusing in particular on what defines a minor soft tissue
injury and whether this definition should be linked to the length of time a claimant suffers symptoms. One proposal under
consideration suggests scrapping the ability for people to recover damages for pain, suffering and loss of amenity (known as PSLA) for minor soft tissue injuries. Claims for special damages could
still be submitted along with a medical report, as is currently the case. However, in future, claimants
might also have to provide medical evidence to clarify the duration of their symptoms. A second proposal recommends introducing a fixed compensation pay out of £400 – or £425 if there are psychological injuries – for minor soft injury claims. If the reforms make it on to the
statute book, there will be far- reaching implications for lawyers, insurers and motorists. According to insurance industry
commentators, some law firms may withdraw from the personal injury sector if they can no longer secure fees at their current high values. Generally, reform is seen as
positive news for insurance companies, as their indemnity expenditure would fall. However insurers could see a hike in operational spend due to an increase in the number of claimants, who, unable to secure a solicitor, bring their claims without legal representation.
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