So what is your next business deal or event?
There may come a time where you need to undertake a significant transaction such as buying another business, or perhaps involving external investors or simply an unusual or large transaction. These sorts of complex transactions often require technical input in terms of the accounting and tax elements, but also commercial advice to negotiate the best deal and to protect you during the process.
Here are some tips on how we can support you and your next deal or event:
Buying a business – If you are looking to buy another business we can help you to identify and evaluate potential targets and to make confidential contact with any suitable options. If a deal looks possible we can then help with negotiating the terms of the deal, and funding needs, and all the practical aspects of taking on someone else’s business, and the important due diligence so you know exactly what you are buying. You will also need to understand the options for structuring the deal in the right way, not only to ring fence risk, but also to minimize tax liabilities. Throughout we then help to drive the deal to completion and keep all the others focused on getting it done efficiently and quickly. The longer a deal takes, the greater the costs and the greater the chance something will go wrong before completion.
Selling a business – Most people sell a business only once. They get just one opportunity to get it right. Whether selling to a trade buyer such as a competitor or supplier, or to a management team from inside or outside of the business (MBO/MBI), it is important to prepare fully for the sale long before the deal happens. Preparing it for sale, finding the right buyer, negotiating the best deal, minimizing the tax and driving the transaction to a prompt and efficient conclusion, are all important steps to a successful sale.
Exit planning – Exiting from your business does not always mean selling it. We help clients to understand the wide range of options for a complete, or partial exit from the day to day running of the business, whether by bringing in investors, or passing ownership to the next generation of employees or family. This covers not only the transaction itself, but the tax implications of the exit and future taxes such as Inheritance tax. A big part of the exit plan is making sure the business can survive beyond you and that you can survive without it!
Succession planning – This is similar to the generic ‘exit planning’ but usually refers to the handover of the business to family or senior employees. Again, there is a need for a clear focus on the right deal and the tax impact for both sides, but it goes further than that. This is often a more emotional transaction than a straight sale to a third party, and requires careful management of the people involved. Often it will take place over a longer period of time and require a strategy for the handover of knowledge, experience, identify gaps and fill them, all to ensure a smooth transition.
New business structures – By far the most common ownership structure is a single limited company that undertakes all the trading activities and owns all the assets. We work with clients to expand that to include holding companies and multiple subsidiaries where the commercial and risk protection benefits are worthwhile. We also work to help sole traders and partnerships to become LLP’s (limited liability partnerships) or to incorporate into a company structure. This can be for trading businesses, property or investment ones, all with their own unique complexities and opportunities. Whenever there are changes to a business structure there are important commercial considerations such as the Bank’s attitude to the change, or tax considerations to avoid any surprises and ensure that you take advantage of the opportunities.
MBO’s and MBI’s – This is a very specific ownership change where the existing management ‘Buy out’ the current owners, or a new management team ‘Buy In’ to the business. Whilst we will often act for just the owners looking to exit, we do on occasions act for both sides to find a mutually beneficial deal. The key element here is usually the arrangement of funding where the management team may not have access to the financial resources of a trade buyer. Preparing business plans and forecasts to support the deal are important to all parties to give confidence in the viability of the deal. Sometimes this can entail structuring the buyout in such a way that it doesn’t need external funding, but still delivers the end result and protects all parties. We find careful management of the relationships and creatively looking at all options mean we can often find solutions and achieve these deals when others have failed.
Acquiring a business share – Buying a share of a business is complicated, and often a once in a lifetime event for many. If the share is a minority (less than 50%) it can expose the buyer to high risks. We can help with all aspects of identifying potential targets, negotiating the deal and the commercial considerations or understanding the terms and merit of the shareholders agreement. If you are thinking of buying a share in another business, make sure you get advice regardless of the amounts involved.
Family changes – Death, Divorce or separation – Sadly, one aspect of family businesses is that there can be a breakdown in the key relationships. That is most common with separation and divorce, but can also affect children and siblings. Understanding the impact this has on the business, the individuals and key stakeholders such as the Bank and employees, is really important. This often involves trying to agree fair values for one party to leave, as well as resolving changes in working roles they may have. Similar issues may also arise on the death of a shareholder, and action should be prompt, sensitive and commercial. Whilst you may think these events will not happen to you, we see it all too often and being proactive and protecting against these events, “just in case” can help to protect the business value and your personal wealth significantly.
Management changes – Whilst there is a complex issue when ownership changes occur, any changes in the key people that run the business may also require careful management. Tax efficient compensation packages, recruitment of suitable replacements and managing the impact on colleagues and key stakeholders (The Bank for example) are really important issues to manage.
Funding and Re-financing – Having the right type and amount of business finance can often be the difference between success and failure. The range of funding options and number of providers are now so large, that it will almost certainly require expertise to get the right package or if there are to be changes. Refinancing with the same bank is now almost the same as moving banks, new lending proposals to be agreed, financial information to be provided, and an anonymous decision by an invisible ‘credit’ team. Whilst the banking system should make switching Banks much simpler, in practical terms it is never a pain free process. So if you are looking at your existing funding, or looking to refinance, we can help.
Business or Share valuation – Valuing a business, or just a share of it is a very complex process. There are a number of methods that can be used and all have inherent flaws. Our team of experts will look at all the key aspects of the valuation needed, as well as the purpose of it (to agree a price, report to HMRC or perhaps just for your own piece of mind), and agree with you what level of valuation report you require. There are some important aspects to valuations that are often misunderstood, such as the impact on a valuation of owning a minority interest, or where assets are held jointly with others. If the valuation is important, get the right expertise to provide it.
The key is that these deals are not all about the numbers and the legal agreements. Whilst these are important parts in the process, the most important elements are always the people. Because many of these are one in a lifetime events, there are often heightened emotions and fear of the unknown. In most transactions like those above, we my often spend as much time handling the politics and personalities, as we do the principles and practicalities. We have seen many deals fall down because people get fixed on specific details, and lose sight of the overall picture.
So when you are picking your advisors you need to ensure that they are not only the people with the skills to execute the legal elements, accounting and tax issues or other key steps, but that they have the people skills to manage all of the individuals involved and get the transaction over the line.