Business Transfer Model 1 – Family Transfer

Business Transfer Model 1 - Family Transfer

Cases

Transfer description Redmond group was founded in 2006. Today Redmond is one of the most famous kitchen equipment brands in Russia. In 2016 Redmond occupied almost 20% of the market with 50 billion rubles volume. Company’s production capacity is located in Asian countries but logistics, trade and intellectual branches of the group are concentrated in St. Petersburg. In April 2016 one of the Redmond group main co-founders – Maksim Ageenko passed away. After that, a long-lasting conflict began between Maksim’s wife Svetlana and five children from two marriages and his business partners. The main reason of the conflict was clarification of the fair value of the share left by Maxim Ageenko to his family. Maksim’s partners – Andrei and Diana offered 240 million rubles to Maksim’s wife and his children, taking option to buy their stocking on a priority basis, but they refused. Svetlana Ageenko and Maksim’s filed seven lawsuits to the Arbitration Court against the Redmond group companies. They demanded providing them with financial and corporate documentation for the entire period of company’s activity, and also challenged two decisions of the general meetings. The corporate conflict led to disappointing results: Diana Zheliaskova, who became the General director, is now in prison, the heirs could not receive as much money as they wanted, and the conflict has not been solved yet. Sources: Business Petersburg – 2017https://www.dp.ru/a/2017/10/23/Multivarka_v_ogne Komsomolskaya Pravda – 2018https://www.spb.kp.ru/daily/26779/3816171/ Facts PreviousCurrentOwnerAndrei Siniavin Diana ZheliaskovaMaksim AgeenkoAndrei SiniavinDiana ZheliaskovaSvetlana, Evgenii, Artem, Maria and Aleksandr AgeenkoLegal form of the company LtdLtdNumber of employees ?????? BrandModel of transferInvolved institutionCountryRedmond1 Family transferNoneRussia […]

Holding company Sozvezdie Vodoleya

Transfer description Holding Company “Sozvezdie Vodoleya” was founded in 1991. The company includes 17 enterprises which operate in different sectors of the economy and united not only by common leadership, but also by a mission, goals and strategy. The value of the company’s assets is estimated at 192 million , and the annual turnover reaches 132 million. Vladimir Khilchenko – President of “Sozvezdie Vodoleya” company, considers that there is no the only formula for family business transferring that would be the perfect choice for everybody: “Everyone has their own situation and their children who may at least want or do not want be part of parental business. And children have different upbringings, different values in life”. Vladimir personally trained his eldest son for running his company since childhood all the time involving him in the company’s business. Sometimes he had to act strictly and even harshly, but in the end German learned to manage: “In fact, he received MBA of my own design and now he is in charge of one of my main projects.” Vladimir manages other projects independently and is going to participate in business for at least another ten years. But finally he wants to involve his son in more projects. Source: Business Petersburg – 2018https://www.dp.ru/a/2018/02/01/Miljard_terzanij_kak_ros Facts PreviousCurrentOwnerVladimir KhilchenkoVladimir Khilchenko and German KhilchenkoLegal form of the company LtdLtdNumber of employees ?????? BrandModel of transferInvolved institutionCountrySozvezdie1 Family transferNoneRussia […]

Consulting group TIM

Transfer description Consulting group TIM was founded in 1992. It is an international company which offers its clients financial, managerial and IT consultations. Evgenii is a founder of the company and was the TIM’s CEO till 2001. Today he is the Chairman of Board of directors and project manager in monitoring of the investment projects and management consulting spheres. Evgenii has 32.5 % of company’s shares. Victor joined TIM when he was a student at the law faculty, in 2007 he became head of the legal department, and in 2011 – of the entire consulting business group. Today he has 30 % company’s shares. Victor continuously expands his knowledge in the field. The sphere of his expert competence is supporting the access to and development of foreign companies on the Russian market, supporting the activities of enterprises with foreign investment, risk management and dispute resolution. Sources: Official site of the company:http://teamgroupconsult.ru/ Facts PreviousCurrentOwnerEvgenii MironovViktor MironovLegal form of the company LtdLtdNumber of employees Less than 50Less than 50 BrandModel of transferInvolved institutionCountryConsulting group TIM1 Family transferNoneRussia […]

Metrostroi

Transfer description Metrostroi is a Soviet and Russian construction company. The company is a monopolist in the sphere of St. Petersburg Metro construction. Metrostroi accomplishes nearly 95% of all the metro construction works and also implements installation of equipment and architectural decoration in Saint Petersburg. In 2016 net profit of the company amounted to 497.8 million , annual turnover was 24.4 billion . The headquarters is located in St. Petersburg. Vadim Aleksandrov has worked in this company for 55 years and was the leader of Metrostroi for about 25 years. He owns 13.62 % of shares. Nikolay Alexandrov, his son, was deputy director of Metrostroi since 2006. Today his stake in the company is around 25 %. He helped his father to realize projects and run the business during more than 10 years. In 2017 Nikolay became the CEO of the company. He also has a title “Honorary Construction Worker”. Sources: Business Petersburg – 2017https://www.dp.ru/a/2017/05/16/Fontanka_rasskazala_o_s Fontanka.ru – 2017https://www.fontanka.ru/2017/06/20/102/ Facts PreviousCurrentOwnerVadim AleksandrovNikolai AleksandrovLegal form of the company PlcPlcNumber of employees ???More than 3.500 BrandModel of transferInvolved institutionCountryMetrostroi1 Family transferNoneRussia […]

Metallservis

Transfer description The Metallservis company is the largest independent metal trader in Russia with a head office in Moscow and subdivisions in 16 cities of Russia and in Minsk. The company was founded in 1993. Annually the company sells about 2 million tons of rolled metal products. The annual company’s revenue is 44.2 billion . The whole dynasty of the Manchenko family works at the Metallservice plant. The total length of service of this family at the enterprise is more than 100 years. Before Petr Manchenko became the General director of this company, he had a position of Deputy Chairman of the State Planning Committee (Заместитель Председателя Госплана КССР). Alexander Manchenko was appointed General Director upon decision of the Supervisory Board. Petr Manchenko was dismissed according to his request. Sources: Forbes – 2013:https://www.forbes.ru/forbes/issue/2013-10/244997-ves-chastnyi-biznes-reiting-mesta-so-101-po-124 Official site of Russian Union of Metal Products Suppliers:http://www.rspm.ru/ru/about/news/?pg=649&subject=sites=bl Official site of Metallservis company:https://mc.ru/eightydate/eightydate Facts PreviousCurrentOwnerAleksandr EvnevichAleksandr Evnevich And Maria EvnevichLegal form of the company LtdLtdNumber of employees 490580 BrandModel of transferInvolved institutionCountryMetallservis1 Family transferNoneRussia […]

Maksidom

Transfer description Maksidom is the first Russian hypermarkets network of goods for home improvement, repair and construction. The company was founded in 1997. Maksidom developed actively in St. Petersburg: one hypermarket opened every two years, and since 2006 they have hypermarkets appeared annually. In 2015 annual turnover of the company was 17 billion . The headquarters is located in Saint Petersburg. In her youth Maria was the Head of the monitoring group in father’s company: she made reports and gave recommendations to the commercial department on pricing. But she wanted to achieve success on her own. Maksidom’s employees did not argue with the daughter of business owner: “Probably, father wanted me to grow up in the company from the very bottom, but without criticism and feedback it’s impossible! And besides it’s incredibly boring”. Maria left the company, worked in newspapers, on TV and even launched her own business. And when she understood that she could achieve something independently, and her father saw it, he offered her to join the Board of directors of Maksidom. Today Maria does not know if her children will work on family company: “They may want to continue the business, but they also may decide to become doctors or artists.” I have no right to interfere with this choice “. She considers that it is necessary to think about how to structure a business, if the next generation does not have a desire to deal with it. Ideally, the business should develop itself, and the family will only supervise this process. Sources: Business Petersburg – 2018https://www.dp.ru/a/2018/02/01/Miljard_terzanij_kak_ros Facts PreviousCurrentOwnerAleksandr EvnevichAleksandr Evnevich And Maria EvnevichLegal form of the company LtdLtdNumber of employees Less than 5.000Less than 5.000 BrandModel of transferInvolved institutionCountryMaksidom1 Family transferNoneRussia […]

Industrial and Metallurgical Holding

Transfer description Industrial and Metallurgical Holding was founded in 1993. The company is the leading provider of metallurgical coke in the CIS countries region and one of the world’s largest suppliers of commercial iron. In 2016 net profit of the company amounted to 9.2 billion , annual turnover was 64.5 billion . The headquarters is located in Moscow. Boris Zubitskii was the founder of the Industrial and Metallurgical Holding. He started his career as a mechanical technician and got gradually promoted to become a general director at the Coke-chemical Plant in Kemerovo. Boris Zubitskii used to be an authoritarian leader and used strict methods against competitors. One day he said: “The main thing in our economy is to be able to wiggle and do something out of nothing.” The eldest son of Boris is Evgenii. He began his career as a coke-oven heater at the Kemerovo Coke-chemical Plant in 1989. When Boris acquired shares of “Tulachermet” plant – one of the largest producers of commercial iron in 1999, Evgenii became the General director of this plant. Boris Zubitsky died on February 7 in 2017, but during his lifetime he transferred 13.38% of shares of the Holding to his son Evgenii. Today Evgenii has 45.4% shares of the Industrial and Metallurgical Holding. Source: Vedomosti – 2017https://www.vedomosti.ru/business/articles/2016/09/19/657462-zubitskii-koks Facts PreviousCurrentOwnerBoris ZubitskiiEvgenii ZubitskiiLegal form of the company PLCPLCNumber of employees ??????? BrandModel of transferInvolved institutionCountryKoks1 Family transferNoneRussia […]

Lanit

Transfer description The Lanit Group was founded in 1989 and is one of the largest ITcompanies in Russia. According to the company’s data, Lanit’s revenue increased by 19.7% or 137 billion in 2017. The volume of sales increased by 12% or 54.6 billion (VAT included). Georgy Gens – the Lanit founder participated in the development and implementation of national Russia computerization programs. He passed away in April 2018. Nevertheless, Georgii prepared a successor for the company’s President position. The group planned to announce this decision 3-4 months later. Filipp – Georgii’s son became the new President. He had been working on the Executive vice president position since 2008 and is responsible for supporting mergers and acquisitions, strategic business development of the group, investment policy of the company and acceleration of startups. Since 2011, he was additionally in charge of several holding structures: the computer equipment distribution and managing 344 stores. Now Filipp plans to combine these responsibilities with the Lanit’s President post: “The process was started, I’m deep into this and catch up absolutely everything that happened. Of course, employees are worried, because the scale of personality is unique. But in general we continue to work in a normal mode. We honour all obligations, we have a good financial viability, and last year we also had good results”. Source: Kommersant – 2018https://www.kommersant.ru/doc/3623081 Facts PreviousCurrentOwnerGeorgii GensFilipp GensLegal form of the company PLCPLCNumber of employees 9.0269.026 BrandModel of transferInvolved institutionCountryre:Store, Samsung, Lego and Nike1 Family transferNoneRussia […]

Kiss

Transfer description Kiss company was founded in 1998 by Irina Seliuta and her friend – Lilia Kiselenko. Irina and Lilia studied together in university and then worked on “Nevskaya Manufactura” – famous state company in Saint Petersburg. The week before the crisis of 1998 the friends started their own business. Today “Kisselenko” brand is known not only in Russia, but also in Europe, Japan and Arabic countries. Irina’s daughter – Maria follows in her mother’s footsteps. She studied International Design Business Management in Finland and currently works in Kiss company as Executive Director. Maria helps to organize fashion shows, mother and daughter represent “Kisselenko” brand together at trade shows: they participated 3 times in Who’s Next international trade show in Paris. Irina hopes that someday Maria will help to improve current situation in Russian fashion industry. Sources: Little one –https://littleone.com/publication/4033-irina-selyuta-k-mode-nuzhno-otnositsya-serezno Business Petersburg -2017https://www.dp.ru/a/2017/03/20/Dizajnerskij_podhod Facts PreviousCurrentOwnerIrina SeliutaMaria SeliutaLegal form of the company LtdLtdNumber of employees 88 BrandModel of transferInvolved institutionCountryKisselenko1 Family transferNoneRussia […]

Ginza Project Group

Transfer description Ginza Project is an international group of companies founded in 2003. Ginza Project owns and manages more than 150 projects in Moscow, St. Petersburg, Baku, New York and London. Before Ginza Project foundation Vadim Lapin was engaged in selling products from Europe. In 1995 he introduced European clothing brands to St. Petersburg market. In 2003 he decided to launch the restaurant business with his partners. The first project of the company was opened that year – the Japanese restaurant “Ginza”. In 2013, Vadim bought shares in several restaurants from his partner at face value. Under the terms of the agreement between the founders, in the future he had to return the shares at the same price. But the reverse transaction did not take place. The former partner filed a lawsuit against Vadim. Against the backdrop of a corporate dispute and claims for 144 million rubles, Vadim Lapin transferred shares in 38 companies with revenues of at least 1.1 billion rubles to his son – Mark Lapin. The transfer occurred 6th and 7th July this year. Nevertheless, Mark has been involved in fathers business for a long time and with his participation many restaurants were opened. Source: Business Petersburg – 2018https://www.dp.ru/a/2018/08/14/Ginza__delo_semejnoe Facts PreviousCurrentOwnerVadim LapinMark LapinLegal form of the company PLCPLCNumber of employees ?????? BrandModel of transferInvolved institutionCountryGinza Project1 Family transferNoneRussia […]

Steps to a successful business transfer:

Step 1 – Align Family Goals
A successful transfer involves understanding each generation’s goals.

Step 2 – Evaluate the Senior Generation’s Liquidity Needs
An evaluation of the senior generation’s future income needs should be conducted prior to structuring the transition

Step 3 – Analyze the Company’s Finances
The business’s historical financial performance provides insight into what the company can handle in terms of a transaction as well as a range of values for the parties to consider a transaction.

Step 4 – Evaluate Transfer Methods
Here we evaluate which path(s) to pursue in the ownership transition.

Step 5 – Evaluate and Analyze the Tax Structure
The transfer methods will dictate the tax consequences to the senior generation, the next generation, and the company all need to be evaluated.

Step 6 – Develop a Buy-Sell Agreement
In situations where the business will transfer to more than one owner, developing a buy-sell agreement is of great importance.