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Succession planning for a retiring partner.

Case Study | James Burrett | 19th March 2019

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PEM were very well known to a three partner professional firm but were not engaged with them until one of the senior partners announced their retirement.

The initial and most pressing issue was to resolve funding the partner’s retirement and ensure any succession planning was able to be implemented. PEM helped advise on a range of options including introducing an external partner to the firm, inviting the ‘rising stars’ within the firms staff to join management and to buy out the existing partner and remain a two partner firm.

Following that advice, management concluded that they would buyout the exiting partner assuming adequate finance could be raised and cash flow permitted. This was done to allow time for the remaining two partners to implement a goodwill model and ring fence the partnership premises, before inviting new partners to join.

PEM were engaged to work with the partners to develop the goodwill model and look at the most tax efficient for holding the property, bearing in mind all relevant taxes.

The end result of the above was the adoption of a goodwill model, the property being ring fenced, a well-funded partnership and retention of key employees, with a clear succession plan.

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