Plan the future of your business

Given our entrepreneurs’ globality, we often see clients moving to countries like the UK, Monaco, Switzerland, Luxembourg, Italy etc. Also, we see a significant number of European clients moving to the Middle East and Asia.

Should you ever wish to relocate to another country, we can guide you through some of the topics that may have an impact on your financial situation. Our network of international clients and colleagues, as well as our professional external advisory firms has provided us with an international perspective that we can leverage while assisting you. We are highly experienced in conducting relocation conversations and focus on limiting risks and optimizing opportunities for our clients.

Equally, we can discuss entrepreneurs returning home after years living abroad. These conversations are vital in ensuring that any change in location has minimal impact on your overall wealth. 

One of the first steps that business owners can take to protect their business is to scrutinize their value chains and identify any weak links. Tight job markets and high input costs may have already put smaller business partners under pressure. The early identification of unfavorable market conditions and a pro-active approach, like adapting intercompany credit policies or invoice payment terms, can help prevent financial distress.

First, entrepreneurs might consider working with a financial planner to disentangle their commercial and personal assets, which are often seen as intertwined. This is advantageous and helps shield your assets from any potential claims or legal action taken against the business. Additionally, intertwined assets may often delay or even derail a potential exit.

Second, entrepreneurs might want to consider whether their personal wealth is overly exposed to a company, country, or sector that is vulnerable to geopolitical, economic, and sustainability challenges.

Third, business owners should consider diversifying the composition of their portfolios to include assets that are less easily impacted by market fluctuations.

Fears that business assets will not be safeguarded by family members are a common reason that entrepreneurs hold off on transferring their firm to the next generation.

Pain points can also arise from a lack of transparency in the communication between the predecessor and successor. In 2022, the UBS Investor Watch Survey found that 40% of respondents wished they had discussed inheritance plans with their parents before their passing.

To allay concerns and protect family assets, founders should first consider working on constructing a robust, flexible succession plan that details commercial, personal financial, and family assets. Open and transparent communication, the establishment of a shared family mission, and financial planning to establish capital budgets for all stakeholders can help provide clarity while navigating the complexities of the succession process. A good asset protection strategy can help to reduce the impact of potential lawsuits as well as the risks of business bankruptcies and nationalizations.

It's also beneficial to be proactive in thinking about how you want to enjoy and distribute the fruits of your labor; whether by taking time off, establishing a foundation, or through a philanthropic endeavor. These are all excellent options for those looking for alternatives, or a supplement to the act of transferring wealth to direct heirs.

Building a comprehensive financial plan is important to determine whether cash flow for the owners and other relevant family members is improved by a sale or whether retaining the business is a preferable option.

For example, are there family members who could step into the shoes of current family management? If not, could professional management be brought in to avoid a sale? If appropriate succession planning isn’t possible, thinking about a sale may become the primary objective.

Timing the sale of a business can have a significant impact on the sale price. Recently, the mergers and acquisitions industry has seen a great deal of activity, and multiples are significantly higher than in years past. Corporations and private equity firms have substantial amounts of cash on hand to drive acquisitions. Such economic conditions may present strategic opportunities for well-positioned businesses, although to fully capitalize on such opportunities, it is essential to have the right structure in place as at the time of an exit as there is rarely a perfect time to restructure inefficient holding structures.

Business owners should be aware that buy-sell planning is an important piece of the overall estate plan. As a business owner, you deserve to know the value of your most prized asset.

What will the price of purchase or divestment be?

Fundamental value is driven by three primary factors: the company's ability to generate cash flow, its risk profile, and its ability to deliver value-creating growth. Whether you independently or partially own a business, being conscious of its value is critical.

Environmental, social, and governance (ESG) is an increasingly relevant topic for all stakeholders. Since this also applies to prospective buyers, ESG transparency is increasingly important as it might affect a business exit.

We believe entrepreneurs who are ESG leaders in their sector may have a greater appeal to sustainability-conscious strategic buyers.

By finding a buyer whose sustainability values are compatible with your own, entrepreneurs may maximize the chances of their former business being run in a responsible way post-exit. Furthermore, if you have a vision of your business achieving certain social or environmental objectives, finding a strategic buyer who is aligned with that vision can help you realize your goals.

On the other hand, an external investor may identify disparities in ESG goals, opening the door to the potential for disagreements or conflict.