Combining business and family is a delicate balancing act. As well as facing the same challenges as other businesses, family run businesses must also manage the complexities of personal and professional life being closely linked. This can be challenging, particularly when it comes to communication, conflict and the expectations of individuals. Having a trusted legal adviser looking out for your commercial and personal interests can prove invaluable.
Our expertise in advising family businesses
Clarke Willmott’s knowledgeable and highly experienced solicitors can advise family business owners on the unique challenges they face. Our multi-disciplinary team has extensive experience of providing expert advice to high growth, small and medium sized family businesses from a range of sectors. This broad and varied experience gives us a deep understanding of the issues faced by family business owners. We provide expert, practical and timely advice that reflects the evolution of the business and the family dynamic over time.
Legal structure and governance of a family business
Identifying the legal structure of your family business is crucial. Without a clear understanding of who is an owner, where responsibilities lie and how each individual benefits financially, you can easily strain relationships. Our solicitors can help you choose a business structure and make related decisions, including setting up a Family Limited Partnership (FLP), division of shares and tax structures. We can also help if you need to reorganise your existing business structure.
Considering the governance of your family business is another important step. As well as outlining agreed practices for how the business is run, it can also help you define your culture and ensure your business runs professionally. Working with a corporate lawyer to produce comprehensive governance agreements can help you avoid conflict and aid smooth running of your business.
Employees and employing family members
Family businesses can employ both family members and non-family members. Both options have their own challenges. Family members may feel a pressure to join the business, or there may be a pressure to hire family members even when they do not have the experience or work ethic required. If a family member is not performing as expected it can be difficult to balance your personal relationship with a better commercial outcome. You may find it hard to attract or retain non-family members as employees. There may be tension or claims of nepotism, especially with regards to salary and progression. Our solicitors can advise on HR and employment law, including contracts and policies, to help you feel confident that you have everything in place to support a valued and effective workforce.
Managing conflict in family businesses
The emotional relationships between family members can be complicated and make managing conflict in your business difficult. There may be conflict between generations about the best way to manage and grow the business, a family member may be finding it hard to let go after retiring or there may be disagreements between current owners. Taking the wrong approach can have a huge impact on long term family relationships and the success of your business.
Our solicitors can help you navigate conflict, including mediation. We can also help you put agreements in place so you can determine how you will manage disputes before they arise. This includes what will happen if the family falls apart or if a dispute cannot be resolved.
Family business agreements
Creating a Family Business Agreement (FBA), sometimes known as a family constitution or a family charter, can provide a clear framework for how your family manages the family business and family wealth. It is a non-legally binding document in which you agree and document your family business’ goals, roles, structure, policies and protocols. Aligning expectations and setting out processes before you need them can help you mitigate conflict.
We can help you create an FBA that is bespoke to your family. Agreeing its content offers an opportunity for honest communication and many families find the process of producing an FBA invaluable.
Family business succession planning
A business succession plan ensures a smooth transition should any members of the business who have significant control retire, lose capacity or die. Our solicitors can help you agree how business and wealth will be passed down and ensure that all involved parties are aligned. It can often involve some difficult questions. What happens if nobody in the family wants the business handed down to them? How do you manage inheritance if you have children who are involved in the business and children who are not?
Getting everything in order, financially and legally, will help your business remain in good shape through the generations and help you avoid unnecessary tax. Our solicitors can help you make sure that you have considered everything, including business property reliefs, making a will, trusts and inheritance planning, probate and lasting power of attorney.
Family businesses and divorce
If you or your spouse own a business or you run or work in a business together, there are a number of issues that may need to be considered if your relationship breaks down.