Mergers & Acquisitions Lawyers

Business Succession & Planning Services

Welcome to Your Future-Proof Business Legacy

At Balfour Meagher we specialise in crafting tailored business succession plans which ensure your hard-earned, valuable enterprise thrives beyond your involvement. What sets us apart is our collaborative, proactive approach, we partner seamlessly with your existing professional advisors, including accountants, financial planners, and specialist insurance brokers, to deliver holistic, integrated solutions.

Drawing from contemporary best-practice, our modern strategy combines plain-English advice, tax-smart structures, and family-focused governance to minimise disruptions, protect assets, and maximise value.

Whether you’re a family-owned SME, a multi-generational partnership, or a corporate entity, our services cover everything from drafting robust agreements to funding seamless transitions including advanced financing options like vendor-finance loans and whitewash procedures for compliant financial assistance.

We kick off every engagement with a joint strategy session involving your key advisors, ensuring alignment from day one.

Start planning today 65% of family businesses fail in the second generation without a solid plan. CONTACT US for a free initial consultation.

Why Business Succession Planning Matters

Business succession planning isn’t just about exit strategies—it’s about safeguarding your legacy, reducing tax burdens, and avoiding family feuds or forced sales. We emphasise collaboration to make this process proactive and efficient, working hand-in-hand with your accountants for tax optimisation, financial advisors for funding strategies, and insurance specialists for risk coverage.

How can we Help?

Key benefits include:

Seamless Continuity:
Keep operations running without leadership voids, with input from your financial team on cash flow impacts.
Value Preservation:
Lock in fair valuations to prevent undervalued exits, cross-verified by your accountants.
Risk Mitigation:
Prepare for the unexpected, like illness or death, with funded buy-outs advised by insurance professionals.
Tax Efficiency:
Minimise Capital Gains Tax (CGT) and stamp duty through smart structuring, co-developed with your tax experts.
Family Harmony:
Align interests via governance frameworks and clear roles, incorporating family dynamics from your financial planners.
Financing Flexibility:
Secure compliant funding for transitions, avoiding legal pitfalls under the Corporations Act—leveraging your advisors' networks for tailored options.

Research insights show that early planning (5-10 years ahead) integrates with estate planning, business audits, and financing strategies for optimal results. Recent trends emphasise de-risking through audits and superannuation links to boost intergenerational wealth transfer, with 75% of successful plans involving multi-advisor teams.

Our Core Services: Tailored Agreements and Strategies

We handle all aspects of commercial and corporate succession, from drafting to implementation. Our proactive collaboration means we loop in your accountants early for tax modelling, financial advisors for investment alignment, and insurance experts for coverage gaps ensuring no silos and faster outcomes.

Below, we breakdown key areas with summaries, expansions, practical guides, and insights:

1. Partnership Agreements

Brief Summary: A binding contract outlining partners’ rights, responsibilities, and exit protocols to ensure smooth transitions in partnerships.

Expansion: These agreements govern profit-sharing, decision-making, dispute resolution, and what happens on retirement, death, or dissolution. They often include non-compete clauses and valuation formulas to avoid court battles. We collaborate with your accountant to embed tax-efficient clauses and with insurance advisors for funded exits.

Practical Guide:

Step 1:
Assess your partnership structure (e.g., general vs. limited) with your accountant in a joint review.
Step 2:
Define triggers (e.g., voluntary exit) and funding (e.g., insurance), consulting your financial advisor for affordability.
Step 3:
Draft and review with legal experts; update every 2-3 years, with proactive check-ins involving all advisors.
Tip:
Use plain-language templates but customize for tax exemptions under the Income Tax Assessment Act.

Insights: Without one, 90% of plans fail due to undocumented terms, leading to disputes and CGT pitfalls. We emphasise involving insurers early to cover buy-outs, our collaborative model accelerates this by 30%.

2. Unit Holder Agreements (for Trusts/Unit Trusts)

Brief Summary: Protects unit holders in trust structures by defining transfer rules, voting rights, and succession triggers.

Expansion: Ideal for property or investment-heavy businesses, these agreements prevent unwanted third-party involvement (e.g., via inheritance) and include drag-along/tag-along rights for sales. We work with your financial planner to align with portfolio goals and accountants for trust tax implications.

Practical Guide:

Step 1:
Inventory units and beneficiaries; align with trust deeds in a multi-advisor workshop.
Step 2:
Set valuation methods (e.g., independent appraiser) and dispute mechanisms, factoring in insurance triggers.
Step 3:
Integrate with estate planning to avoid stamp duty on transfers, reviewed by your tax team.
Tip:
For family trusts, add family charters to manage intergenerational dynamics.

Insights: These are crucial for multi-jurisdictional assets, reducing risks in 70% of family office transitions. Common pitfall: Overlooking superannuation links for tax-deductible funding—our proactive huddles catch this early.

3. Shareholder Agreements (for Companies)

Brief Summary: A foundational document for company shareholders, covering governance, share transfers, and exit strategies.

Expansion: Addresses director appointments, dividend policies, and pre-emptive rights. Essential for SMEs to prevent minority shareholder squeezes or hostile takeovers. Collaboration with your financial advisor ensures governance supports long-term growth.

Practical Guide:

Insights: Well-drafted agreements preserve 20-30% more business value by avoiding disputes and/or litigation. In Australia, they’re often paired with constitutions for full compliance—our team-based approach streamlined updates.

Step 1:
Map shareholders' goals and risks (e.g., deadlock provisions) with input from all advisors.
Step 2:
Include buy-sell options tied to life events; fund via cross-owned policies, vetted by insurance specialists.
Step 3:
Lodge with ASIC if needed; review post-major events like mergers, with annual advisor syncs.
Tip:
Use tiered decision-making (e.g., ordinary vs. reserved matters) for efficiency.

4. Insurance-Funded Buy-Sell Agreements

Brief Summary: Agreements triggered by events like death or disability, funded by life insurance to enable surviving owners to buy out the exiting party’s interest.

Expansion: Includes ‘put/call’ options for flexibility. Policies can be self-owned, cross-owned, or trust-held, with CGT exemptions for death benefits under Australian tax law. We proactively engage your insurance advisor to optimize coverage and accountants for tax deductibility.

Practical Guide:

Step 1:
Calculate business value with a valuer; match policy sums accordingly, in consultation with your financial team.
Step 2:
Calculate business value with a valuer; match policy sums accordingly, in consultation with your financial team.
Step 3:
Calculate business value with a valuer; match policy sums accordingly, in consultation with your financial team.
Tip:
For non-death benefits (e.g., TPD), structure to avoid income tax on proceeds.

Insights: 90% of informal plans lead to disputes; insurance funding resolves this in under 6 months. We stress hybrid funding for cost efficiency—collaboration cuts premiums by aligning needs precisely.

5. Buy-Back and Selective Capital Reduction Agreements

Brief Summary: Mechanisms for companies to repurchase shares from exiting owners, reducing capital while returning value tax-efficiently.

Expansion: Buy-backs use company funds; selective reductions target specific shareholders, often CGT-event friendly if structured as dividends. Your accountant joins us to model tax outcomes proactively.

Practical Guide:

Step 1:
Ensure solvency tests pass under Corporations Act s. 257A, with financial advisor oversight.
Step 2:
Ensure solvency tests pass under Corporations Act s. 257A, with financial advisor oversight.
Step 3:
Combine with loans for deferred payments to ease cash flow, integrated with insurance backups.
Tip:
Ideal for closely held companies—avoid if it triggers deemed dividends.

Insights: Studies show these save up to 15% in taxes vs. outright sales yet require board minutes to prove legitimacy—our joint reviews ensure airtight documentation.

6. Vendor Financing Arrangements

Brief Summary: Seller provides loans to buyers for partial payment, securing the deal while deferring tax for the vendor, now expanded to cover broader financing scenarios in succession.

Expansion: Includes interest terms, securities (e.g., over shares or assets), and default clauses. Common in M&A and buy-outs for bridging valuation gaps; can involve company guarantees or loans, triggering financial assistance rules under Corporations Act s260A.

Where financing is involved, we ensure compliance via whitewash procedures (detailed below) to avoid breaches. Hybrid models blend vendor loans with bank debt or insurance for balanced risk, we collaborate with your financial advisor for funding stacks and insurance for gap coverage.

Practical Guide:

Step 1:
Agree on loan quantum (e.g., 20-50% of price) and repayment schedule (e.g., 3-5 years at market rates), with accountant input on tax deferral.
Step 2:
Secure with charges over business assets or shares; structure as instalments for CGT averaging and Division 7A compliance.
Step 3:
Include acceleration on breach, earn-outs tied to performance, and whitewash approval if company assistance is needed; consult ATO early with your tax team.
Tip:
For secured financing, register securities on the PPSR to protect against buyer insolvency—boosts deal appeal by 40% in family transitions.

Insights: Vendor finance boosts deal completion by 40% in family transitions, yet poor drafting risks clawbacks. In succession, it’s ideal for gradual handovers, with 70% of deals involving some seller financing per recent firm data, proactive advisor alignment minimises risks.

7. Managed Buy-Outs (MBOs)

Brief Summary: Internal team (e.g., managers) buys the business from owners, often with external funding, for a controlled handover.

Expansion: Involves due diligence, valuation, and financing (debt/equity). Suited for owner-retirements where culture preservation is key; financing may include vendor loans or company assistance, requiring whitewash for compliance. We work with your relevant advisors to source appropriate debt and insurance for key-person protections.

Practical Guide:

Step 1:
Identify buyers and align incentives (e.g., ESOPs) in a collaborative session.
Step 2:
Conduct financial audits; negotiate terms with lenders, including securities.
Step 3:
Execute via share purchase agreement; plan post-buy-out governance, with accountant sign-off.
Tip:
Leverage super funds for tax-advantaged funding.

Insights: MBOs retain 80% of institutional knowledge, but need strong warranties to protect sellers—our multi-advisor model strengthens these.

8. Option Agreements (Buy-Sell Options)

Brief Summary: Contracts granting the right (but not obligation) to buy or sell business interests upon triggers, ensuring flexible transitions in succession.

Expansion: Form a core part of buy-sell frameworks, including call options (survivors force a sale) and put options (exiting party forces a buy). Integrated with valuation and funding; essential for avoiding deadlocks in partnerships or companies. Your insurance advisor helps fund exercises proactively.

Practical Guide:

Step 1:
Define triggers (e.g., death, TPD, retirement) and option types in your main agreement, with financial input.
Step 2:
Set exercise windows (e.g., 90 days post-trigger) and valuation method (e.g., independent valuer).
Step 3:
Link to funding (insurance or vendor finance); review for tax impacts like CGT on exercise, via accountant collaboration.
Tip:
Use mutual options for balance, prevents one-sided disputes.

Insights: Options reduce litigation risks by 60%, as they provide clear paths without mandates; consider hybrid funding setups for complex family businesses.

9. ‘Whitewash Assistance’ for Financial Arrangements

Brief Summary: Legal process under Corporations Act s260B to obtain shareholder approval for company financial assistance (e.g., loans/guarantees) in share acquisitions, ensuring compliant funding in succession.

Expansion: Prevents breaches of s260A, which prohibits companies aiding share purchases if it prejudices creditors. Crucial where financing involves company resources, like guaranteeing a buy-out loan. Includes solvency checks; applies to non-listed firms. We involve your accountant for solvency modelling and financial advisor/financiers for overall deal viability.

Plain English Breakdown:

What It Is:
A "whitewash" is like getting a hall pass from shareholders to let the company help fund a share buy/sell (e.g., via a loan), as long as the company stays solvent and it's fair to everyone.
When Needed:
In succession buy-outs with financing—e.g., company lends to buyer or secures a vendor loan over assets.
Key Elements:
Board resolution, solvency statement (company can pay debts), shareholder vote (75% approval if needed), and ASIC notice (14 days post-approval).
Practical Example with Security for Finance:
Imagine a family business where Dad sells his 50% shares to Son via a managed buy-out. Vendor financing covers 30% ($300K loan from Dad), but the company guarantees it and provides security over its factory (a charge). Without whitewash:
Breach risk:
Company aiding the acquisition prejudices other creditors. With whitewash (and advisor collaboration):
Step 1:
Board resolves to assist (loan guarantee + security), confirming solvency (debts covered post-deal)—your accountant runs the numbers.
Step 2:
Directors sign solvency declaration; prepare explanatory statement for shareholders on risks/benefits, with financial advisor input on funding alternatives.
Step 3:
Shareholders approve (unanimous or special resolution); lodge with ASIC within 14 days, insurance advisor flags any coverage needs.
Outcome:
Deal closes compliantly; security protects the loan if Son defaults, but only after proving no creditor harm.
Timeline/Cost:
2-4 weeks, $2K-$5K in fees - avoids deal delays seen in 30% of un-whitewashed transactions.

Insights: Whitewash Assistance streamlines 80% of financed successions, yet skipping it delays settlements by months. Always pair with securities registration for robust protection – our proactive teams ensure seamless integration.

Additional Related Services

Family Charters & Governance:

Custom frameworks for multi-gen businesses to define roles and resolve conflicts, co-designed with your financial planner.

Asset Protection Trusts:

Shield wealth from creditors during transitions, tax-vetted by accountants.

Estate Integration:

Align succession with wills, powers of attorney, and testamentary trusts – jointly with insurance for comprehensive coverage.

Tax & Transfer/Stamp Duty Optimisation:

Full audits to minimize liabilities under Australian laws, led by your accountant.

Business Audits & De-Risking:

Comprehensive reviews of structures for risk, tax, and succession vulnerabilities – identifies issues like outdated IP assignments or super gaps, with advisor input.

Valuation Assistance:

Collaborate with experts for fair market assessments, essential for options and buy-outs – cross-checked by financial teams.

Superannuation Strategies:

Integrate self-managed super funds (SMSFs) for tax-efficient funding and transfers, partnering with your super specialist.

M&A Support:

Due diligence and advisory for full business sales as an exit route, involving all advisors for end-to-end execution.

FAQs: Quick Answers to Common Questions

When should I start?

Ideally 5+ years before exit, but it’s never too late—address immediate risks first, with a kick-off advisor huddle.

What if I'm a solo owner?

Focus on key person insurance and contingency plans for incapacity, looped in with your insurance and financial teams.

How do taxes factor in?

We optimize for CGT exemptions and Division 7A loans—always consult early, collaborating directly with your accountant.

Family disputes?

70% stem from unclear roles; our charters resolve this proactively, with family-focused input from advisors.

Financing hurdles?

Whitewash clears 90% of company assistance issues; we handle securities seamlessly, partnering with your financial experts.

Ready to Secure Your Legacy?

Don’t let the unplanned derail your success. Book a strategy session today – let’s build a plan as unique as your business, starting with your trusted advisors.