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The day you finally wind up or pass along your business is the beginning of your second act: the first day of the rest of your life. So, now what?
Many business-owners find that post-exit fulfilment can be a bigger challenge than making a business succeed in the first place. Meticulous planning might have gone into selling your business, but often less consideration is given to post-exit life. However, with good planning, the options are endless.
Many entrepreneurs use their wealth to start, or invest in, another company. Others take on consulting or advisory roles, or invest the proceeds from the sale into a diverse portfolio. Some former owners set about establishing a foundation or charitable trust, while others are happy to walk off into the sunset.
Whatever your path, Goodbody recommends that you undertake a comprehensive financial audit, so that you can meet your annual living costs and fill any potential gaps through strategic investment management.
The information in this article is based on tax law as at 31 December 2022. It is for general guidance on matters of interest only, and does not constitute professional advice. Nothing in this document constitutes investment, legal, financial, accounting or tax advice and does not confirm that a strategy is suitable or appropriate to your individual circumstances or otherwise constitutes a personal recommendation to you. Recipients should always seek independent tax and legal advice. Goodbody does not guarantee the reliability of the information provided. Goodbody, its servants or agents accept no responsibility for any loss arising from any action taken or not taken by anyone using this material.
STARTS HERE
YOUR SECOND ACT
57%
intend to exit within 5 years, yet just 15% have a formal succession plan in place
are planning to start another business after exit
1in3
have a leadership succession management plan
have never done a personal financial plan
intend to selL their business
while
37%
52%
23%
Succession planning brings the curtain down on one aspect of your life, but it also opens the door to so much more. It’s where your second life begins - but it’s crucial to plan for this inevitability as far in advance as possible.
The dissolution and passing on of your business legacy should be handled with care to maximise your return on those decades of hard graft. Loose ends don’t benefit anyone, least of all your nearest and dearest.
To build an accurate picture of the way in which people manage this transition, Goodbody and AIB Capital Markets collaborated on an independent survey of Irish business-owners called ‘What’s your plan?’.
The findings make interesting reading for anyone who owns a business, as the day will eventually come when a succession plan of their own will need to be put in place.
WATCH
THE VIDEO
For those who toil for years to build their business, succession planning is one of the most important strategic elements they will ever need to consider.
Less than
HALF
wish to pass
on to family
GET READY FOR ACT TWO
If you decide to move abroad, considering all tax implications is crucial, even more so for owners who retain shares in the company after exiting, as they may be liable for additional tax. Owners often decide to become non-resident as they approach an exit so they can take advantage of more favourable tax regimes overseas.
The extent of someone’s charge to Irish tax depends on their tax residence, ordinary tax residence and domicile status. If an owner is tax-resident, ordinarily tax-resident and domiciled in Ireland, a liability to Irish tax arises on their worldwide income and gains.
It is important to understand the rules, because establishing non-residence and non-ordinary residence in Ireland takes time and can often be impractical for families.
EMBRACING NEW HORIZONS: RELOCATING OVERSEAS
Many business owners winding down their companies also want to give some of their wealth to family members during their lifetime. Family charters or family constitutions are becoming more popular because they help tap into the family culture and define their values and aspirations. Setting out broad principles of everyone’s expectations relating to education, investment decisions, personal expenditure and philanthropy can help with the transition. It can also open lines of communication and resolve conflicts.
Setting out broad principles to manage everyone’s expectations relating to education, investment decisions, personal expenditure and philanthropy can ease the transition. It can also open lines of communication and help to avoid conflict.
Current legislation in Ireland allows parents to give each of their children a tax-free sum of up to €335,000 in the form of a gift or inheritance. If the cap is breached, further gifts or inheritances will be subject to capital acquisitions tax (CAT) at 33%.
There is a lot to consider and the right preparation is vital. If you are thinking about succession planning - no matter how far down the road that may be - contact Goodbody for expert advice, and visit the business-owners section of the Goodbody website for more valuable insights.
SHARING THE WEALTH: INHERITANCE
Goodbody Stockbrokers UC, trading as Goodbody, is regulated by the Central Bank of Ireland and Goodbody Stockbrokers UC is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Goodbody is a member of Euronext Dublin and the London Stock Exchange. Goodbody is a member of the group of companies headed by AIB Group plc.
Download our Survey report
The findings make interesting reading for anyone who owns a business, as the day will eventually come when a succession plan of their own will need to be put in place.
intend to exit within 5 years, yet just 15% have a formal succession plan in place
was most important driver of exit decision making
have a leadership succession management
plan
HALF
Less than
intend to selL their businesS While 23%
wish to pass
on to family
TAX
57%
Have never done a personal financial plan
37%
52%