Business succession and your premises: separating the two questions

Why the building and the business are different questions

The business is an operating asset — it needs a capable successor, working capital and customer continuity. The premises is a property asset — it needs an owner, a tenant, and a view on whether that owner and that tenant should be the same entity going forward.

Treating them as one decision often means the property question gets resolved by default, as a side effect of who takes over the business, rather than being decided on its own merits. Separating the two questions means both can be answered properly.

Your options at succession

• Keep the building in the family, lease it to the business — The next generation running the business leases the premises from a family entity that retains ownership — separating operating succession from property succession, and giving family members not involved in the business an ongoing asset.
• Sell the building via a leaseback, de-risk, keep trading — The business sells the premises to a long-term owner and leases it straight back. The family releases the capital tied up in the property while the business keeps operating from the same site under a long lease.
• Sell both together — Where the succession plan is a full exit rather than a handover, the business and the premises can be sold together or separately, depending on what maximises value and certainty for the family.

Funding retirement and equalising siblings

A common succession tension: one child (or one branch of the family) is taking over and running the business, while others aren't involved day-to-day but have an equal stake in the family's wealth. The premises is often the family's largest single asset outside the operating business, which makes it a natural lever for equalisation.

A leaseback can convert that illiquid asset into cash — used to fund the founder's retirement, or to equalise what non-operating family members receive — while the operating business continues to trade from the same site under a long-term lease. It separates 'who gets the property value' from 'who runs the business,' which is often exactly the separation a succession plan needs.

These are concepts to discuss with your accountant, lawyer and financial adviser as part of a broader estate and succession plan — the right structure depends on your family's specific circumstances, entities and goals.

General information only, not legal, taxation or financial advice. Succession and estate planning should be worked through with your advisers.

Questions worth asking before you decide

• If the building stays in the family, who owns it, and does that ownership map cleanly onto who runs the business?
• If the building is sold, what does the family do with the released capital — retirement funding, equalisation, reinvestment, debt reduction?
• Does the next generation running the business want the responsibilities of also being the landlord?
• Would separating property succession from operating succession reduce friction between family members, or create it?