HOW TO PLAN THE RIGHT BUSINESS EXIT STRATEGY

Whitley Stimpson director Jonathan Walton advised a UK based director of a UK subsidiary with an overseas parent on the exit from his business.

Jonathan said: “The planning for this client involved providing a valuation as well as a shareholder’s agreement. This meant the shareholder had a guarantee of how much they would be receiving, and the company knew how much their outlay would be.

“We also considered how this was to be paid, the tax e ects for the recipient, and the funds that were available for the company to do a purchase of own shares.

“The shareholder’s agreement set out how the exit would proceed, providing a specific timeline, highlighting every step of the process.

“The result was absolute clarity to avoid discontent and disharmony in the future.”

Jonathan frequently advises on Enterprise Management Initiative (EMI) schemes. This includes schemes where shares are issued on key performance indicators as well as exit only schemes.

One example of this was where a husband and wife wished to reduce their hours of work and incentivise key employees.

Jonathan set up an EMI scheme which provided share ownership to two key employees with an intention of a potential management buy-out at a later date.

Jonathan, who has dealt with management buyouts that have been funded via the use of EMI options, said: “An EMI scheme is a good way to sell your company because you know the buyers and you can remain as a consultant to ensure a smooth transition. This also provides an internal market if there isn’t a ready market for a sale.”

There are many ways of exiting your business, but it does require careful planning to get the business in the right shape for sale in the first place.

For further information contact Jonathan Walton jonathanw@whitleystimpson.co.uk

For more information about how Whitley Stimpson can support your business visit www.whitleystimpson.co.uk