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Succession Planning

Our client is a care home provider and a family-owned business. Over a period of many years, they had built up an impressive portfolio of profitable care homes but, due to recent purchases of two additional homes, held higher bank debt than they might have otherwise expected. The care home group was structured in such a way that the father and his children were the business owners and it was the father who sought an exit from the business but also to leave a platform from which his children could fully take over the business.

How we helped our client
EQ met with the family to discuss the existing structure and to assess the expectations of the father in disposing of his shareholding in the group. He wished to release a significant amount of capital but also to remove himself from any future obligations.

The children were unable to afford to buy the company shares and therefore it was determined that the only feasible purchaser was the company itself, but it had borrowings that were high. EQ’s Corporate Finance team assessed that a purchase could be funded out of the company’s future profits and put together a proposition for the company’s bankers which was duly accepted.

Our Private Client tax team then constructed a phased sale proceeds structure and wrote to HMRC for tax clearance so that the company purchase of its own shares was treated as a capital gain in the hands of the father. That clearance was subsequently secured and the sale took place immediately thereafter. The company has now fully paid out to the father and the children continue to take the care home operation forward to new levels.

For more details or to discuss how we can help you, please contact our Private Client Taxperts.

For further assistance with any corporate finance queries, you can contact our Corporate Finance team.

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