Management Buy-Out

Facts

The owner of a long-standing business was seeking retirement. Two of the key staff of the business were keen to take over ownership of the company.

The owner and the two key staff struck a deal for the owner to be bought out through an amicable deal. Some of the cash payable to the owner was to be paid now and some was to be payable over a period of two years after the deal was struck.

Our Advice

We advised the take-over team of how the deal could be structured in the most tax efficient method and how it was possible to finance the deal by using the assets of the business to lever against.

We held meetings with all parties involved so that they understood what the restructuring meant in practical terms to them. We also advised the take-over team in writing as to what costs would be incurred in carrying out the restructuring and what impact there might be on the business post restructuring.

When we were successful in gaining the relevant pre-transaction clearances from HM Revenue & Customs, this meant that the deal could proceed as we had planned.

Outcome / Savings

The deal was recently completed on the basis as we advised in an efficient and timely manner.

The take-over team effectively saved over £200,000 in tax because of the fact that they did not have to acquire the business with their own money.