Miller Hendry warns against not seeking advice early doors when selling a business
Tayside based solicitors and estate agents, Miller Hendry, today (20 June 2019) warned about the dangers of not receiving the proper advice early doors when seeking to sell a privately-owned business.
The focus tends to be on a quick sale for shareholding directors of many privately-owned companies, before moving onto new ventures or retirement. However, many under-estimate the time involved in making a business market ready and do not seek advice on the different options before they start, or take advice on the route map to follow for a successful sale.
Financial or legal pitfalls may occur in the latter stages of a deal, causing it to fail if advisors are not called in at the start of the process. Ideally, an advisory team should be gathered right at the beginning, including a lawyer and an accountant specialising in company transactions, to guide the company on the preparation for sale, before any moves are made to seek out buyers.
Alistair Duncan, Partner and Head of the Commercial department at Miller Hendry, said: “The role of the advisory team in this preparatory stage is as important as any work they will undertake in finalising the deal. Taking your time to get it right and make the business market-ready means that timescales of 12 to 24 months for preparation are not uncommon.
“In putting together a detailed exit plan for a limited company, the first question you are likely to be asked is whether you are looking for a share sale or an asset sale, also known as a business sale. The answer may be influenced by personal, financial or legal reasons which can be explored with the specialists, but the final decision will determine the process to be followed and the resulting tax implications for both buyer and seller.”
A key factor in the decision making between these two routes is the tax position. This is complex and specific to each situation, but generally individual shareholders will be better off in a share sale, with a single tax charge on any capital gains arising, and which is likely to be reduced to 10% if entrepreneurs’ relief applies.
In an asset sale, there is a potential double tax charge, firstly on the company, with corporation tax on the profit made on the sale of assets, and then on the shareholders when they withdraw the sale proceeds from the company.
Alistair added: “At each stage, the most important thing is that all members of your advisory team are working with each other in a seamless way throughout the process, as well as directly with you. Where the ground shifts, as it inevitably will, it’s important they remain focused on the vision you have for the company sale, and work with you to achieve the best possible outcome in changing situations.”
For further information on this subject, please contact Alistair Duncan at Miller Hendry on 01382 200000 or email: firstname.lastname@example.org.
- Circular Tayside: Circular Construction and the Perth West Project, 10th February, 3-4 PM
- Johnston Carmichael experts reveal business predictions for 2021
- Trio of New Year appointments at Bell Ingram
- Scottish Government Daily Update Wednesday 20th January 2121
- Scottish Government Daily Update: Tuesday 19th January 2021
- Blackadders: Protecting Your Future in 2021: Wills and Powers of Attorney – Part 1
- Blackadders: Civil Court Update: Continued Operation of Scotland’s Civil Courts
- Blackadders: The First Minister announces tougher restrictions: what does it mean for office work?
- Scottish Government Daily Update Tuesday 19th January 2021
- Circular Tayside: Prince Charles launches 'earth charter' for businesses tackling nature and climate crises
- Scottish Government Daily Update Monday 18th January 2021
- Scottish Government Daily Update Received Friday 15
- Latest Scottish Government Daily Update Received Thursday 14th January 2021
- Charity Begins at Home
- Thorntons: Employment Law Webinar - Are you Ready for 2021?
- Scottish Government Daily Update : Wednesday 13th January 2021
- Blackadders: 7th January 2021 The Law behind the Headlines: New mother wins payout of up to £9k after she was left out of Christmas party while on maternity leave’ (Mirror online, 6 January 2021))
- Scottish Government Daily Update - Tuesday 12th January 2021
- £10m DigitalBoost Grant Now Open For Applications
- Circular Tayside: New Partnership Launches Initiative to Mobilise Natural & Cultural Heritage for Climate Action
- Scottish Government Daily Update Monday 11th January 2021
- Scottish Government Daily Update Friday 8th January 2021
- Scottish Government Daily Update - Thursday 7th January 2021
- Circular Tayside: Travel for All Our Tomorrows £82,640 of investment secured to develop a second stage of Regenerative Tourism experiences in the new Cateran Ecomuseum