Thinking About Succession, Where Do You Start?

Introduction - Succession, Where Do You Start

In the construction and engineering world, many business owners spend years building their company but very little time planning what happens after them. Succession planning isn’t just about retirement, it’s about ensuring your business survives and thrives when leadership changes.

\Whether you want to sell, pass it to family, or promote from within, the decisions you make today determine the future value and stability of everything you’ve built.

At Jones Financial Accounts (JFA), we help owners of construction and engineering firms prepare their businesses for the next chapter, whether that’s a management buyout, family handover, or strategic sale.

A well-structured succession plan protects your legacy, your team, and your financial future.

What you need to review

1️⃣ Business valuation and financial readiness (highest priority).

The first step in any succession plan is understanding what your business is actually worth. This isn’t just about assets or revenue; it’s about sustainable profit and transferable systems.

For construction and engineering firms, that means reviewing:

• Profit consistency: Are margins stable and predictable, or dependent on your personal involvement?

• Cash flow resilience: Does your business have reliable payment cycles, or does cash depend on one or two clients?

• Systems and controls: Can the business operate without you approving every PO, quote, or valuation?

  
  

  Valuation should be supported by management accounts, job costing data, and a 3-year forecast, the same documents an investor or bank would request.

2️⃣ Leadership and operational continuity.

Identify who could realistically step up, a family member, senior manager, or external buyer. Construction businesses often rely heavily on owner-led client relationships.

Your goal is to transfer knowledge, not just responsibility.

Formalise processes, delegate decision-making gradually, and document key client and supplier agreements.

3️⃣ Ownership and legal structure.

Review shareholdings, director responsibilities, and contracts. A poor company structure can block a sale or inheritance.

For example, if equipment and property are in the same entity as operations, separating them into holding companies can simplify succession and protect assets.

4️⃣ Tax planning and timing.

Succession is as much about when you exit as how. Early planning can save substantial tax through reliefs such as Business Asset Disposal Relief or gift holdover reliefs for family transfers.

The earlier you start (ideally 3–5 years in advance), the more options you’ll have.

5️⃣ Client and team communication.

A good plan keeps clients, suppliers, and staff confident.

Construction projects rely on continuity, people need reassurance that the business remains stable beyond your leadership.

Why it matters for businesses

Construction firms without a plan often hit crisis points:

• Sudden leadership change: Illness, burnout, or retirement without preparation can leave the company directionless.

  
  

• Family conflict: Without clear agreements, personal and business relationships clash over shares, salaries, or roles.

  
  

• Value loss: A business heavily dependent on its owner often sells for a fraction of its potential. Buyers see risk, not opportunity.

  
  

• Operational disruption: Projects stall because key knowledge sits in one person’s head, usually the founder’s.

A thought-out plan transforms your exit into a strategic advantage:

• Higher sale value: Systems-driven, well-documented companies sell at stronger multiples because they’re lower risk.

  
  

• Continuity for clients: Relationships and reputation stay intact, securing repeat work.

  
  

• Team motivation: When employees see a future beyond the founder, retention and accountability rise.

  
  

• Financial freedom: With proper tax and structuring, you extract maximum value with minimal leakage.

  
  

One engineering client we advised built a £2.5m turnover business but had everything under their personal control. Over 18 months, we helped systemise processes, delegate commercial management, and separate ownership of key assets. When they sold, the buyer paid a premium because the company could “run itself.”

Strategy to get it right

At board level:

1. Define your timeline. Are you exiting in 3 years, 5 years, or sooner? Every decision, recruitment, investment, contracts, should align with that timeframe.

2. Set a clear succession goal. Sale, management buyout (MBO), family transfer, or phased step-down, each has different tax and funding implications.

3. Build a finance roadmap. Review profitability, balance sheet strength, and working capital. Remove personal costs, clean up director’s loans, and ensure management accounts reflect the true trading position.

Finance department actions:

• Prepare monthly management accounts that show performance by project, client, and margin.

• Implement rolling 12–24-month forecasts, buyers and successors pay more for predictability.

• Document key processes like credit control, CIS, and payroll, so transitions don’t rely on memory.

Operational and HR steps:

• Develop internal leaders. Start delegating commercial sign-off, site decisions, and client communications to senior staff.

• Standardise procedures. Introduce documented project workflows, pricing templates, and safety systems. This makes the business transferable, not just profitable.

• Retain talent. Offer bonus or share schemes to keep key staff through the transition.

  
  

Commercial actions:

• Communicate succession early with major clients and suppliers, reassure them about continuity.

• Avoid long-term contracts that lock you personally into delivery; ensure agreements sit with the company, not the individual.

The goal: create a business that can thrive without you while still reflecting your values and legacy.

Common mistakes

• Leaving it too late. Waiting until retirement or burnout limits options. Last-minute successions often sell under pressure, losing up to 30–40% of potential value.

  
  

• Mixing personal and business assets. Vehicles, property, or equipment held personally complicate valuation and sale. Separate them early.

  
  

• Ignoring tax reliefs. Missing deadlines or structuring errors can forfeit reliefs like Business Asset Disposal Relief (worth up to £1m of gains taxed at 10%).

  
  

• Not grooming successors. Handovers fail when successors lack financial literacy or leadership exposure.

  
  

• No legal documentation. Without shareholder or partnership agreements, disputes can stall or destroy deals.

  
  

Reputationally, poor succession damages trust with clients, subcontractors, and employees. Financially, it can lead to emergency sales, high taxes, and loss of control.

Misconceptions (three quick truths)

1️⃣ “Succession is only for retirement.” False, it’s about business continuity. A good plan protects value today, not just when you step away.

2️⃣ “Family handover is simpler.” Often, it’s the hardest. Emotional ties cloud judgment, so formal agreements are even more essential.

3️⃣ “I’ll plan it when I’m ready to leave.” By then, it’s too late to maximise value. Succession planning should start 3–5 years before transition.

6) Why professional support pays off

At JFA, we take the stress out of succession. Our CFO-led approach helps business owners:

• Prepare your accounts for sale or transfer, cleaning up reporting and improving valuation.

• Model different exit routes, whether sale, management buyout, or family succession, to see which yields the best outcome.

• Optimise tax and structure, using reliefs and reorganisations to keep more of what you’ve earned.

• Build systems and reporting frameworks so your business is sustainable, not dependent on one person.

  
  

With JFA, you don’t just prepare to exit, you build a business strong enough to outlive you.

Key takeaways

• Succession planning protects your business, your family, and your legacy.

• Start early, ideally 3–5 years before exit, to maximise value and minimise tax.

• Build systems, leaders, and clarity so your business runs without you.

• JFA helps you plan, structure, and execute your transition with financial confidence.

Wrapping up today's insights, tomorrow we simplify another accounting challenge.