Business succession: 5 aspects to plan for

Sooner or later every entrepreneur leaves the company: by choice, by age or through an opportunity to sell. The timing is not always yours to choose, but the preparation is. A succession planned years in advance is worth far more than one managed under pressure. Here are the five aspects that decide the outcome.

1. Governance and structure

Before transferring the business, you have to make it transferable. A company in which the founder is the only decision-maker, the only contact for key clients and the only one who “knows how it works” is worth less and is harder to hand over. What is needed:

• Delegate responsibilities and formalise the processes.
• Clarify the roles in a shareholders’ agreement (who decides what, how you enter and exit).
• Where it makes sense, separate real estate and operating activity into distinct entities.

2. Business valuation

What is it really worth? The answer changes radically depending on the method — discounted cash flows, market multiples, net asset value — and on the assumptions. An independent, well-argued valuation serves three purposes: setting realistic expectations within the family, negotiating with a third-party buyer and defining the price between heirs who come in and heirs who step out. It is essential to distinguish the value tied to the founder’s person from the standalone value of the company.

3. Taxation of the transfer

This is where value is lost or preserved. The variables are many and depend on the form of the transfer:

• Gift or inheritance to family members: treatment varies significantly from canton to canton, often with favourable conditions for direct descendants.
• Sale to third parties: the distinction between a share deal and an asset deal matters, as do issues such as indirect partial liquidation or transposition, which can turn a tax-exempt capital gain into taxable income.
• Dividend timing and equity structure in the years preceding the sale.

There are no universal shortcuts: every structure must be calculated on the specific case, without off-the-shelf schemes.

4. Financing the transaction

Whoever takes over must be able to pay. If the buyer is a family member, an internal manager (management buy-out) or a third party, the price often cannot be covered by own funds alone. The typical levers:

• Bank financing secured by the company’s assets or cash flows.
• Deferred price or partial payment tied to future results (earn-out).
• Vendor loan, in which the seller finances part of the price.

The financing structure must be designed together with the tax structure: they affect one another.

5. Timing and the human factor

An orderly succession takes years, not months. The transfer of knowledge, relationships with clients and suppliers, and the team’s trust cannot be improvised. On the human side, three things count: communicating in good time with the family and key collaborators, managing the expectations of heirs who do not join the company, and providing for a period of shadowing between the one who leaves and the one who takes over.

A project, not an event

The five aspects are interconnected: valuation affects taxation, taxation affects financing, financing affects timing. Treating them in isolation produces costly surprises — an unexpected tax burden, a price the buyer cannot cover, a divided family.

At SIH ONE we coordinate the entire succession project: governance and agreements, valuation, tax planning of the transfer, financing structure and long-term support, bringing corporate, tax and wealth expertise around the same table. Are you thinking about the future of your business, even if the handover is five or ten years away? Now is the right moment to begin. Let’s talk.