Swiss SMEs and succession planning: tips from a financial planner

Are you ready to start the next chapter for your company?

“What is good for the company? What is good for me?” In practice, the two perspectives cannot always be easily separated. Nevertheless, being aware of the role in which you make each decision is essential—whether as a business owner or as an individual. Given that this process is far from easy, we have specialized in providing holistic advice to families who run their own businesses, from company pensions to succession planning.

The “time” factor in company succession planning

A change of ownership can trigger a number of changes both within the company and also in your personal life. How do you prepare a company for sale while not thereby generating tax or financial burdens for either you or your successor? To bypass any avoidable downsides, succession planning must be treated as a dynamic process. The earlier you start, the greater the flexibility.

Seven-point checklist for business owners

• Legal form: Restructuring from a sole proprietorship to a stock corporation or a limited liability company can offer advantages. But it is time-consuming. Especially when it comes to taxes, holding periods must be observed before a sale.
• Balance sheet: Any financial resources in the company that are not required for operations can weigh down the balance sheet unnecessarily. These can include real estate, investments, or excess cash. They can complicate the sale of the company and should be removed well in advance. Taking action early also provides opportunities for tax optimization.
• Price: Selling your own company is often a deeply personal matter. Its emotional value cannot always be quantified in monetary terms. Furthermore, there is no objective “correct value” for a company. Numerous factors can influence its worth, including industry, current market conditions, financial markets, the company itself, and the chosen successor, to name just a few. If the company is transferred within the family or to existing employees, the sale price can generally be lower than if an external solution is sought. Either way, a market-based business valuation provides a solid foundation for price negotiations.
• Retirement planning: What is your overall financial situation, including your retirement funds? Are you aiming for as large of a profit as possible from the sale of your business to boost your retirement savings?
• Taxes: What direct and indirect taxes will you have to pay? What taxes will the business and your successor(s) have to pay? Those who are not under time pressure can optimize the tax effects of a sale, for example, by streamlining the balance sheet (see above) in a timely manner.
• Timing: You cannot expect to find a suitable successor overnight. By when do you want to withdraw from the business at the latest? What should their background ideally be? Do you prefer a family member, current employee, or someone from the outside?
• Transition period: Do you and your successor share the belief that there is nothing more valuable than experience? Then you probably want to stay in the company for the first few months or years and provide advice.
  
  

From all these points, you can put together reliable facts for decision-making if you involve the relevant experts at an early stage. We will be happy to put you in touch with our financial planners, tax experts or estate planners.