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.
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 of 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).
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.
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.
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.
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.
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.
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 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.
It’s best to get tax advice as early as possible. Early input can help you identify risks, make use of available reliefs, and structure the deal to achieve the best post-tax outcome.
Tax due diligence reviews the company’s tax history to spot potential issues before they disrupt the transaction. This can strengthen your negotiating position and help avoid delays or price reductions.
We help ensure you're not taking on hidden tax liabilities and that the business is structured tax efficiently post-acquisition. We also assist in reviewing key tax clauses in the sale and purchase agreement.
Yes, the way a transaction is structured, whether it's a share sale or anasset sale, and whether a holding company is involved, can significantly affect tax outcomes. We help you choose a structure that aligns with your goals.
Absolutely. A business’s valuation can be influenced by past tax positions or potential tax liabilities. We can guide you on how these factors might impact your business valuation and prepare you for negotiations.
