There are two main reasons for building a business:
- To generate income.
- To create an asset to sell.
For some entrepreneurs building a business for sale is their primary goal. They deliberately set out from the start to build value in their business.
Many business owners, however, set out to generate a good income for themselves. But that doesn’t mean the business has value as it’s generally built around the individual; so it has merely a nominal value. Some business owners discover they have created a business with some value that they can sell, but it’s business owners who build asset value that have a saleable business.
If you’re looking for a pot of gold at the end of the rainbow you must understand what is of value in your business, identify the weaknesses and address them.
Don’t rely on the stories of people getting pay-outs of ten times their earnings. You’ll need to plan carefully and well ahead of the sales if you want to maximise your return.
Our team of business advisors at Friend & Grant has the experience and knowledge to:
- Provide an honest opinion and valuation for your business.
- Advise what changes you need to make to generate value and how to prepare the business for sale.
- Assist with preparation of the materials needed for the sale; management information, budgets and forecasts and strategic and business plans
- Inform you of the tax consequences of the sale regardless of the situation.
- Advise and guide you on management buy-outs or management buy-ins.
- Support you in preparing structures and formulating finance packages for you to leave the business. Deferred consideration is often used to enable management to take over a business.
- If you’re an existing shareholder in a company and want to exit, we can advise on your options, such as a company buy-backs of own shares. That is a popular and tax beneficial way for a business owner to retire from a business or to be bought out. We have dealt with many company buy-backs.
- If you are passing the shares on to the next generation we can advise on the tax consequences.
Importantly, we’ll advise you on the inheritance tax consequences of your exit. In most cases, your business asset will qualify for business property relief and therefore be exempt from inheritance tax. Once you sell your business, however, the proceeds will most likely become liable to inheritance tax. It is therefore vital that the IHT consequences are high on the agenda when considering your exit.