“My business is my lifeblood... and my financial future.”   

 

 

Whether this statement is fact or expectation it has never been more important to plan and ensure that you survive now and thrive in the future.  

Preoccupations with ‘U’ shaped or ‘W’ shaped recessions or ‘deadcat bounces’ is all very interesting to read about in the broadsheets but business and domestic life must go on.   

 Planning

 The recession is dealing a painful blow to many high net worth individual’s plans for an early exit to a comfortable new life. So what should they do? Plan. Planning and implementation is the only way out. Planning is equally applicable to profitable businesses that want to consolidate their market position.  

For most of us who are concerned about the increase in income tax rates and where capital gains tax might be going a consultation with an experienced tax and corporate advisor is very important. There remain opportunities for minimising tax when selling assets and businesses – there are Entrepreneurs’ Relief (CGT at an effective rate of 10% for the first £1m of your accumulated business sales), Business Property Relief and dividing assets with a spouse. Whether you are buying or selling an appreciation of the tax benefits of a deal is vitally important, especially if capital gains tax rates are increased as anticipated.  

For those planning to sell their business the good news is that the trade buyers are coming back into the market. The not so good news is that the frothy prices of 2007 / 2008 are not around and the current market conditions have lowered price expectations and indeed valuations. So the key now is to plan with all the facts. Do you sell for the lower multiples of profit but with the knowledge that tax rates are beneficial?  Or do you wait for the time when valuations recover but tax rates are likely to be higher? In some countries capital gains tax is in line with income taxes; so with the introduction of 50% income tax, who knows what the Government of the day may propose.

If you are selling a business you will increase your chances of attracting the right purchaser by preparing the business for sale and offering it to the market place in the right way. The essential ingredient to the mix is specialist corporate finance advice, combined with good tax planning. Any seller should undertake careful pre-sale grooming and planning with their advisors. In order to assist in the sales process you should already have covered off all the areas where the buyer will need comfort in order to minimise the opportunities for the buyer having reason to chip at the price.

Equally if you are looking to acquire, by drawing on our expertise, we will assist you in structuring a deal that on the face of it may appear low to a seller but with an informed presentation may well be acceptable. Being in control of the process and clearly understanding the pressure points of a sale and purchase process is essential, especially in today’s difficult market conditions.

So what’s the message? Start considering your plan now and obtain professional advice as soon as possible so that you can make a fully informed decision. Our corporate finance team supported by our extensive tax capability will give you all the facts and figures you need, complemented with our usual sound commercial advice.

Contact David J Travis on 0161 245 1000 or email dtravis@clbcoopers.co.uk and let us help you either sell or buy a business.

 

Taken from our newsletter taking:account Issue 3 2009.