Acquisitions and Disposals for Family Businesses

Acquisitions and Disposals for Family Businesses

  • Post published:27/05/2021

The sale of your business is a key stage of a family business’ life cycle which requires extensive preparation, investment of time and costs, and commercial decision making.

Before considering any sale, you need to plan well and in advance to enhance the value of your family business and ensure that it is as attractive as possible to entice buyers. This will help you to maximise on the sale price and minimise the risks of the deal falling through.

This hard work in the planning stages will pay off when it comes to progressing with the sale of your business and it will also highlight issues potential purchasers need to be aware of.

Key Elements to Consider

Selling your family business can be a stressful time, with many issues being juggled at once. This includes negotiations with the buyer, considering the appropriate deal structure or whether you will be demerging part of your business in order to sell that part on, whilst continuing to actually run and operate your business.

An interested purchaser may be a fellow business owner who wishes to merge with your company, or a competitor who is only interested in a specific arm of your business. Alternatively, you may wish to explore the option of placing your company into employee ownership or possibly look at winding up your business if a positive exit route can’t be found.

The process can be complex and has many opportunities for problems to arise, particularly during the buyer’s due diligence. However, by guiding you through the sale preparation and due diligence process, we can help to maximise your sale price and minimise the risks of the deal falling through or any sale price reduction. We can help you to ensure that your business presents itself at its best and to anticipate any issues that a buyer may raise, regardless of the disposal approach to be taken.

IHT Planning and Exemptions

When considering the disposal of your business it is important to consider what this will mean for your own inheritance tax position.

On the basis that your business had been a trading business, rather than a wholly or mainly investment business, you will have benefitted from either 50% or 100% relief from inheritance tax on the business and its assets if you were to die whilst still holding that business. A disposal of the business will increase your personal assets and therefore the exposure to inheritance tax is significantly increased.

A key part of any business disposal should include plans for your own inheritance tax planning. This presents you with an opportunity to make provisions for those around you whilst increasing your own financial security and protection of your wealth.

If you would like any advice or support please Contact Us at help@lucasross.co.uk. We work with a number of strategic legal partners to ensure we provide enhanced private client experts, ensuring you as the business owner receive the right advice on your estate planning options to ensure your future is secured in a comprehensive and tax efficient manner.