Business Transfer Model 1 - Family Transfer

Cases

Business Transfer Model 1 – Family Transfer
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 […]
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 […]
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 […]
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 […]
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 […]

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.