Restructuring: Will Your Business Structure Facilitate Your Succession Plans?
When thinking about the future for your business and plans for succession, the structure of your business is an important consideration.
The structure of the ownership of the business, structure of the business’ debt and ownership of assets can all create barriers which may prevent you from either selling or transferring your business to a third party, family members or employees.
Typical issues can include:
- An over-complicated ownership and debt structure that may make the company unsellable.
- A company owning assets that a potential buyer may not want or may make buying the company too expensive.
- A business not owning assets that are essential for its operation, for example where a key trading asset is owned personally by an existing shareholder.
- A company having multiple trades with a potential purchaser only interested in taking over one.
- An exiting shareholder wanting to retain assets owned by their company either for sentimental or future income reasons.
- The structure of the business preventing the availability of certain tax reliefs and making the tax costs of disposal prohibitive.
Our Transaction Tax and Corporate Finance teams can work with you to understand your future objectives and ensure your business is set up in such a way to help you achieve these plans. Ensuring your business is set up to allow future succession can help remove any barriers to a future sale, whilst also ensuring that the tax costs of a future disposal are minimised. You never know when an opportunity may arise.
We are currently working with one of our clients considering employee ownership as a possibility for future succession of the company. However, the existing shareholders wish to retain certain assets under the existing ownership and not have this diluted by future issues of shares. As a result, these assets are to be transferred to a new company, leaving the main trade in the existing company, giving the existing shareholder control over the assets they want to retain.
You can read our previous article on ‘Is Your Business Structure Fit For Purpose?’ here.