Whether you are looking for an exit, to protect certain assets or to divide a business, a re-organisation could be the way forward for your business.
Over the past 2-3 years, the corporate team at Wake Smith has been involved in a multitude of internal re-organisations for clients, across a wide range of sectors.
Director and head of company commercial at Wake Smith, Duncan Shepherd, looks at the process.
“There are a number of reasons why a re-organisation may be considered by a company.
“The first may be in preparation for exit.
“In this case, the property and equipment is transferred to a separate company which rents it to the trading company allowing the owners to receive an income after the sale of the trading company.
“This also enables employee share ownership in only the trading company as, say, the first steps of a management buy-out.
“Provided that it is not a mechanism to circumvent any insolvency laws, a reorganisation can also be used to protect certain assets.
“It can also be used as a demerger to enable the owners to divide the business between them and go their separate ways.
“Re-organisations usually involve setting up a new company for a particular purpose.
“This could be the incorporation of a new holding company, using a share for share exchange mechanism or, if a group structure already exists, a separate subsidiary to undertake part of the business (hive across/transfer of a division) or it’s required to facilitate the demerger process.
“As well as expertise from Wake Smith, re-organisations generally require the input of a number of the client’s professional advisors including its accountants and, sometimes, its surveyors, to enable the required objective to be reached.
“It is imperative to take advice from your accountant in order to achieve the correct structure and where appropriate obtain any necessary tax clearances from HMRC.
“Given that the individuals involved usually are directors of various companies, depending upon the circumstances, it may be advisable to get independent valuations for any assets that are to be transferred between various companies as part of the re-organisation. This will ensure that the individual is acting in the best interests each of the various companies/businesses.”
To discuss re-organisation further, please contact Duncan Shepherd on 0114 266 6660 or email [email protected]
