Is Collateral Transfer right for your business?
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from an expert?
Selling a business can be a stressful process, not to mention a heart-ache. When business owners decide to sell their business, certain preparations must be made. In likening it to selling a car or motorbike – the business must look clean, run like a dream and be extremely visible. By visible we mean, it must be open to potential buyers who can see (and understand) the ‘mechanics’ and ‘workings’ of the business machine.
This will need preparation and financial fitness. It may also involve mild-restructure to prepare for the selling of the business to avoid heavy tax obligations or to maximise the profitability of the sale.
It is important prior to any notice offering your business (or company group) for sale, to ensure the efficiency of the business is first class and to ensure that its debt obligations and borrowings are correctly match-funded, promoting healthy cash-flow and profits. This may in-turn lead to many different problems. For example, it may lead to a requirement to withdraw personal guarantees for current loan commitments before the sale and to ensure that by doing so, the borrowing rates and terms do not increase, weakening the accounts. It may equally mean that some assets that are not included in the sale being retracted, requiring additional collaterals to be placed in the business to retain its gearing ratios in correct proportions.
HCC can also assist by placing experienced members to your Board, ensuring that the structure can be withheld throughout the sale process.
In real-life, there are a myriad of financial problems needing often complex solutions.
By structuring the business into a ‘holding group’ off-shore company ahead of the sale, may help its owners to retire abroad and bring their fortunes with them tax-free.
For foreign country residencies (including of course United Kingdom) or for the creation of tax trusts for the children, it pays to prepare. All of these can be arranged prior to the sale of your business, allowing you to plan the use of the sale proceeds, or to invest further in other businesses from a tax-friendly jurisdiction whilst maintaining your domiciliation in your country of choice.
Very little company purchaser will acquire a business where its management and/or principals are not present after the sale. There is always a hand-over period. With good preparation, a private business sale should not cause any inconvenience to the seller, nor should selling through ill-health cause any weakness in the final purchase price of your business.
By understanding your business and working hand in hand with the business management, our expert financiers can burden the tasks of the hand-over period with the new management, allowing for business owners to relax and withdraw from the business with little or no delay.
If you are considering selling your business or company group, contact us first. We may be all you need.