Business sales – attributes and barriers – complex structures
My fourth blog in this series on business sales considers the structure within your business and the possible impact on its marketability.
There are many legitimate business reasons for a company to operate within a group structure. These reasons could include the safeguarding of capital assets, the segregation of new business activities, or taxation planning to name just a few.
Whilst the structure of the business being sold should not prevent a sale, depending on the structure and the reasons for it you may need to be able to explain why the structure came about and how the structure will be dealt with in any sale agreement.
If you operate several businesses and you are only considering the sale of one part of the business it is important to be able to demonstrate a clear distinction between the different operations. A buyer will need to be able to clearly see what they are buying and how that business will operate when it is no longer part of your business operations.
It is also important to recognise where the structure may create the involvement of other parties in the negotiations. One example would be where a business operates from premises held within a pension fund.
Whilst you may view the premises as your pension fund, there is often a professional trustee to assist with the administration of the pension scheme and to ensure you do not fall foul of any legislation and potential tax charges in relation to the pension scheme.
If you have a complex business structure, we would be happy to discuss the potential issues with you to ensure you are as prepared as possible for any future sale.
This blog forms part of a comprehensive whitepaper on ‘Selling a Business‘ written by the Corporate Finance team at Ensors.