Buying or Selling a Company

Making the complex simple

Home 5 Corporate & Business Tax 5 Buying or Selling a Company

A sale or acquisition of a business will always have tax implications. A buyer and seller will typically have differing objectives when it comes to structuring the transaction.

It can be useful to understand the key drivers for the other party as this can assist in negotiating terms and resulting in a better post-tax result. Whilst the headline deal price may look attractive, if there are any unexpected tax leakages, the post-tax implications of buying a business can look radically different than what was anticipated, which is why getting tax advice early really can make a huge difference.

Valuations

There are many situations where a business owner may need a valuation of their business; and an exit or sale is one of those. There are a number of ways of arriving at an appropriate valuation, and this can depend on the sector in which you operate. The valuation may also be affected by an historic tax position, which we can advise on as part our pre-sale tax due diligence process. (Valuations are also critical when considering some form of approved or unapproved share scheme as part of an employee incentivisation plan).

Structuring a Sale Tax efficiently

We understand that when you are planning a sale or business exit you will be spinning a lot of plates. We can ensure that your sale is structured in a tax efficient manner and that you have a robust, practical plan for that sale, which can be given to your lawyers or corporate finance adviser.

Pre-Sale Tax Due Diligence

Our tax due diligence process ensures that key tax risks are identified early in the deal process, so as to ensure that these do not cause a sale to fall through. We can also advise on those tax risks may be mitigated, thus increasing the value of your business.

Tax Help when Purchasing a Business

When you are buying a business you need to know that you are not inheriting previous tax issues; and that the business will operate tax efficiently post-acquisition. We can help with negotiation of the tax aspects in the sale and purchase agreement, ensuring that you have sufficient legal protection against unnecessary tax exposure.

Case Study

Buying and selling a company

Management Buy Out

Intro

We were asked to advise on a tax efficient way for the Founders to hand over control to an existing employee and minority shareholder. The Founders wanted to have a minority stake in the business going forward.

Issue

The minority shareholder did not have the funds to purchase the shares outright from the Founders. As an existing employee, we also had to consider the Employment Related Securities legislation.

How we solved it

A Newco was formed which acquired all the shares in the trading company (“Oldco”). The minority shareholder exchanged shares in Oldco and the Founders exchanged their shares for a combination of cash, loan notes and shares in Newco.

The Outcome

The cash consideration and redemption of loan notes was funded from the future profits generated by the trading company enabling the employee to end up with a majority shareholding for a relatively small financial commitment.

View more

Buying or
Selling a Company

Reorganisations
& Reconstructions

Innovative
Tax Reliefs

EIS
and SEIS

Employee
Share Schemes

International
Issues

Please tick

9 + 5 =