The successor is already involved in the enterprise or is to be introduced to it. It is necessary to determine the scope of their responsibility, the moment of taking over management functions and the manner of the future transfer of ownership.
BUSINESS SUCCESSION
Business succession
Business succession does not begin with a will or with the choice of a particular legal structure. First, it is necessary to establish how the owner envisages the future of the enterprise: who is to manage it, who is to be the owner, what place family members are to occupy in the company, and what should happen if the original plan cannot be implemented. Above all, however, a well-planned succession helps to avoid the chaos associated with a change of the person managing the enterprise.
We advise company owners and family businesses on preparing and implementing succession plans and we confront their expectations with the legal environment. We analyse the ownership and asset structure, the manner in which the enterprise is managed, the situation of potential successors, and the legal and tax consequences of the available solutions.
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Attorneys-at-law and advocates
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Law · Tax · Finance
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Succession · Reorganisations · Family foundations
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Support from plan to implementation
The aim is to prepare a succession model that will make it possible to preserve the continuity of the business, to organise ownership relations and to establish clear rules for the company's operation after the current owner withdraws from day-to-day management.
Many years of experience in providing legal assistance in the field of succession allow us to state that succession issues do not concern only the largest business entities; on the contrary, succession in small and medium-sized entities, in which the owners have postponed succession matters for too long, is often the most complicated. In the case of large entities, strategies concerning operations after the owner's departure have usually already been developed.
On this page
- 02When is it worth starting succession planning?
- 03What does succession advisory involve?
- 04What do we analyse before preparing a succession plan?
- 05Succession plan in a company
- 06Ownership and management are two different decisions
- 07Succession in a family business
- 08What solutions can be used in succession?
- 09The family foundation as an element of succession
- 10Succession in a company (spółka)
- 11Succession in the event of sudden events
- 12Scope of succession advisory
- 13What does the cooperation look like?
- 14Why is it worth preparing succession in advance?
- 15Why Russell Bedford?
- 16Team leading succession projects
- 17Frequently asked questions about business succession
- 19Related services
- 20Let us talk about the future of the company
When is it worth starting succession planning?
The greatest opportunities remain when the change of ownership is prepared in advance. This makes it possible to separate decisions concerning ownership, management, assets and the role of individual family members. It is never too early to plan succession, and practice shows that it can be too late.
What does succession advisory involve?
A well-prepared succession covers more than a change of owner.
It is crucial to determine how the company will be managed, who will take the most important decisions, what rights individual successors will receive, what will happen to assets not directly connected with the business, and how to limit the risk of future disputes and prevent decision-making deadlock.
We begin the process by familiarising ourselves with the current situation of the enterprise and the owner. We analyse the legal form, the organisational and ownership structure, the components of the assets, the manner of conducting the business, the corporate documents and the relations between the persons who are to participate in the succession.
The owner's objectives are also important. A different solution is required in a situation where one of the children is to take over the entire company, and a different model where ownership remains divided among several family members and only some of them deal with management.
On this basis, we prepare options for further action and assess their legal, tax, ownership and organisational consequences.
What do we analyse before preparing a succession plan?
Ownership structure
We determine who currently owns the enterprise, the shares or the stock, and how ownership rights are exercised.
If the business is conducted by several entities, the analysis also covers the links between the companies and the owners. It may also be necessary to analyse whether the owner's matrimonial property regime will affect the implementation of the succession plans.
Manner of managing the company
In many enterprises, key decisions remain concentrated in the hands of the founder. Before succession, it is necessary to determine which competences can be transferred, who is prepared to take them over and what the process of change should look like.
Potential successors
We take into account their role in the enterprise, their experience, their readiness to become involved in running the company and their expectations regarding future ownership.
Not every heir has to be a person managing the business at the same time.
Assets
We analyse the assets used in the business as well as the assets held outside the enterprise. This makes it possible to establish what should actually be covered by the succession plan and how individual components may be transferred. This is often also a good moment to put the company's asset-related matters in order and to confirm that the company's assets are being used optimally.
Corporate documents and contracts
Articles of association, statutes, current contracts, shareholders' agreements, powers of attorney and other documents may have a direct impact on the possibility of carrying out the planned change of ownership.
Family situation
The plan should take into account not only the legal structure, but also the actual relationships between the persons whom the succession will concern.
A solution that is formally correct but inconsistent with the actual way in which the family or the company operates may be difficult to maintain in the longer term.
Tax consequences
The transfer of assets, a change in the ownership structure or a reorganisation of the enterprise may give rise to various tax consequences. These should be assessed before the target solution is chosen.
Succession plan in a company
The succession plan should answer specific questions concerning the future of the enterprise.
Who is to take over ownership of the company? Who will manage it? Will it be the same person or persons? Is the change to take place at once or in stages? What role will the current owner retain? What will happen to the assets if some of the successors do not wish to run the business? How will the most important decisions be made?
The plan may cover both measures carried out during the owner's lifetime and solutions applicable in the event of his or her death or permanent incapacity to continue running the business.
Depending on the situation, the work may concern, among other things, a change in the ownership structure, a reorganisation of the enterprise, the preparation of corporate documentation, changes to the management rules, the introduction of successors into the company or the use of a family foundation.
The plan should be feasible in practice. Therefore, before preparing the documents, we establish the sequence of actions, their consequences and the dependencies between the individual stages.
Ownership and management are two different decisions
Passing the company on to the next generation does not have to mean transferring ownership and full responsibility for management at the same time.
In one family, it may be appropriate to gradually introduce a successor into the management board while the founder retains ownership control. In another, the children may become co-owners while the day-to-day running of the enterprise remains in the hands of one person or a professional management board.
A model is also possible in which some family members work actively in the enterprise while the others participate only in its ownership or benefit from the family assets on different terms.
It is worth establishing such a division of roles before the legal changes begin. It makes it possible to avoid a situation in which the formal structure of the company does not correspond to how the enterprise is actually to function after the succession.
Succession in a family business
In a family business, succession concerns the business, the assets and the relationships between family members at the same time.
Merely indicating a successor does not solve the problem if it is not known what rights the other family members will have, who will make the key decisions and on what terms the next generation will be able to become involved in the business.
The work may regulate, among other things:
- the rules for family members' entry into the enterprise,
- the division of competences between the owners and the persons managing the business,
- the manner of making the most important decisions,
- the rules for the sale of shares or stock,
- the manner of proceeding in the event of a conflict between shareholders,
- the rules for remunerating persons actively working in the company,
- solutions concerning persons who remain owners but do not participate in management.
The aim is to create rules that will also be understandable when, in the future, a larger number of owners from the next generation appear in the enterprise.
What solutions can be used in succession?
There is no single model appropriate for every company. The structure should follow from the structure of the enterprise, the owner's objectives and the situation of the successors.
Gradual introduction of successors
A successor may first take over operational responsibility, then management functions, and only at a later stage ownership of the enterprise or of the shares.
Change of the ownership structure
Preparing the succession may require a change in the current ownership relationships or in the manner in which the shareholders exercise their rights.
Reorganisation of the enterprise
If the current form of business makes it difficult to carry out the succession, an earlier reorganisation may be considered, including a change of legal form or putting the group structure in order.
Reorganisation of companies
Agreements between shareholders
Where there are several owners, it is important to establish the rules for management, for making key decisions, for disposing of shares and for proceeding in the event of a change of owner.
Investment and shareholders' agreements
Inheritance solutions
The succession plan may also cover a will and other solutions concerning future legal succession.
Business succession management
In the case of a sole proprietorship, one of the instruments that may need to be taken into account is business succession management. Its role should be analysed as part of a broader plan for the continuity of the enterprise.
Family foundation
In appropriate cases, a family foundation may serve to concentrate assets and to regulate the rules for their use by successive generations.
Foreign structures
If the assets, the business or the family situation involve more than one jurisdiction, solutions used abroad may also be subject to analysis, including succession structures appropriate to the given legal system.
The family foundation as an element of succession
A family foundation is one of the available tools, but it should not be the starting point for succession planning.
First, it is necessary to establish what objective is to be achieved, what assets are to remain in the family, what roles individual family members are to perform and how the enterprise is to be managed.
Only afterwards can it be assessed whether a family foundation corresponds to these assumptions and how it should be embedded in the overall structure.
If such a solution is being considered, we analyse it together with the other elements of the succession and the legal and tax consequences of the planned structure.
Succession in a company (spółka)
In companies, succession requires taking into account not only family relationships, but also the rights of the other shareholders and the rules arising from the corporate documents.
Before any change of ownership, we check how the rights to shares or stock are regulated, what restrictions apply to their transfer, what rights the other partners hold, and whether the current management rules will suit the post-succession structure.
If ownership is to pass to several people, the way decisions will be taken in the future must also be specified. The absence of such arrangements can lead to a situation in which the successors jointly own the business but have no agreed rules for exercising ownership rights.
Where necessary, preparing the succession may therefore involve amending the company's articles of association, the corporate documentation, or concluding appropriate agreements between the partners.
Succession in the event of sudden events
A plan prepared solely for the anticipated generational change is incomplete.
It is also necessary to answer the question of what will happen to the business if the owner is unable to carry out the succession in accordance with the original timetable.
Depending on the form of business activity and the company's structure, solutions concerning the representation of the business, the exercise of rights under shares or stock, inheritance documents, the succession administration, the rules governing the company's bodies and the position of the other partners may be relevant.
The aim is to reduce the risk that a sudden event affecting the owner will at the same time create a problem with managing the company.
Scope of succession advisory
The support may begin with an audit of the business and the ownership situation. This makes it possible to determine which elements of the current structure favour succession and which require prior tidying up.
At the next stage, we prepare possible options, taking into account the owner's objectives, the situation of the successors, the form of business activity, the structure of assets, and the legal and tax consequences.
Once the target model has been selected, the work may include preparing documents, changes to the ownership structure, reorganisation, bringing the successors into the business, changing the management rules, and the corporate and registration steps needed to implement the adopted solution.
If the succession covers several areas at once, we coordinate the legal work with the tax and financial analysis.
What does the cooperation look like?
We establish the owner's objective
We begin the conversation with the future of the company, not with the choice of a particular legal structure. We establish who is to take over the business, who is to manage it, and what role the current owner is to retain.
We analyse the company and its assets
We review the ownership and organisational structure, the corporate documents, the components of the assets, and the way decisions are taken.
We assess the situation of the successors
We establish who is ready to take an active part in the business and who is to remain outside day-to-day management.
We prepare succession options
We compare the possible solutions and their legal, tax, ownership and organisational consequences.
We select the target model
Together we establish the order of the changes and the route from the current structure to the target solution.
We implement the plan
We prepare the documentation, the corporate changes and the other steps needed to carry out the succession.
Why is it worth preparing succession in advance?
Succession prepared in advance gives the owner the opportunity to genuinely influence how the company is handed over.
It makes it possible to observe the successors in their new roles, gradually transfer responsibility to them, and change the assumptions if practice shows that the original model is not working.
It also allows time for reorganising the business, tidying up the assets, amending the corporate documents and preparing tax solutions.
Predictability also matters. A clear plan for the change of ownership reduces uncertainty on the part of family members, partners and the people managing the business.
Why Russell Bedford?
Succession analysed together with law, tax and finance
A change of ownership can affect the legal position of the business, its taxation, the structure of its assets and the way it is financed all at the same time.
Attorneys-at-law, tax advisers and financial experts may work together on the project.
The solution follows from the owner's objective
We do not start by choosing a family foundation, a reorganisation or any other instrument. We first establish what the target way of operating the business and the family is to be.
From concept to implementation
The support may cover an analysis of the current structure, the preparation of options, the documentation, and the implementation of organisational, ownership and corporate changes.
Experience in changes of ownership and reorganisations
Succession projects often require changes to the structure of companies, the corporate documentation and the rules for exercising ownership rights at the same time.
Support with international matters
If the business, the assets or the family members are connected with more than one jurisdiction, the project can be coordinated with advisers operating in other countries.
Team leading succession projects
Projects concerning business succession are led by attorney-at-law Izabela Podleśna and advocate Tomasz Mankiewicz.
Izabela Podleśna
Director of the Legal Department · attorney-at-law, OIRP in Warsaw, entry no. WA-16630
She has more than 10 years of experience in legal advisory work concerning corporate services for entrepreneurs, reorganisations and M&A transactions. She gained her experience, among other places, at Polish and international law firms and in in-house legal departments.
She has led projects concerning the reorganisation and consolidation of capital group structures, changes of ownership, and transactions for the acquisition and sale of assets and shares. In her current practice, she also advises clients on business succession and the protection of family assets, including projects using a family foundation.
Specialisations
- Corporate reorganisations
- Mergers and acquisitions (M&A)
- Transactions involving the acquisition and disposal of assets and shares
- Ongoing corporate services for entrepreneurs
- Due diligence
- Acquisition transactions and investments VC
- Business succession
- Protection of family assets
- Family foundations
Tomasz Mankiewicz
Advocate | Director, Legal Department Russell Bedford Poland
Tomasz Mankiewicz is an advocate and a Director in the Legal Department of Russell Bedford. He heads a team of lawyers providing comprehensive legal services to entrepreneurs, in particular in the areas of ongoing legal services, corporate law, mergers and transformations of commercial companies.
He coordinates projects covering issues of commercial and tax law, taking into account potential legal and tax risks and the protection of clients' interests.
Specialisations
- Corporate law
- Mergers and acquisitions (M&A)
- Restructurings
- Transformations of commercial companies
- Liability of members of the management boards of capital companies
- Due diligence
- Ongoing legal services for entrepreneurs
- Civil proceedings
- Commercial proceedings
- Criminal proceedings
Frequently asked questions about business succession
Business succession is a prepared process of transferring ownership, management or both of these areas to the next people. It may cover a change of ownership, preparing the successors, reorganising the business, and documents governing the future rules on how the company operates.
Related services
Family foundation
Advisory on selecting the foundation model, its establishment and the arrangement of the rules governing asset management and benefits for beneficiaries.
View serviceReorganisation of companies
Changing the structure of the enterprise or group if the current model does not match the planned succession.
Investment and shareholders' agreements
Regulating the rules of management, decision-making, disposal of shares and relations between the owners.
Tax advisory
Analysis of the tax consequences of ownership, asset and organisational changes related to succession.
View serviceLegal advisory
Full range of legal services for enterprises and company owners.
View serviceLet us talk about the future of the company
The starting point is the current structure of the enterprise and the owner's objective.
At the first stage, it is worth determining who may in the future take over ownership or management of the company, what roles the family members are to perform and which elements of the current structure require arrangement.
On this basis, possible succession scenarios can be prepared and the order of further steps determined.
The information presented on this website is of a general nature and does not constitute legal or tax advice. The selection and implementation of a succession solution requires an analysis of the situation of the enterprise, the owner and the planned manner of transferring ownership and management.