CLICK BELOW TO ANSWER YOUR QUESTION ON RESTRUCTURING AND DEMERGERS
When should I seek Insolvency help?
Often the first sign that a business could be heading for insolvency is a reduction in revenues. This could be more obvious for businesses in some sectors than others. For example, for businesses in the retail and hospitality & leisure sectors, reduced footfall during periods of national lockdown and Tier 3 restrictions had an immediate impact on turnover.
The earlier a business seeks advice from a professional insolvency practitioner, the more options there are likely to be to avoid a winding up process. Exploring a company administration for example, the appointed insolvency practitioners will assess the financial position of the business, take action to ease pressure on cashflow and realise value where possible. In some cases, it is possible to position the business for sale as a going concern, while also protecting employee and creditors interests.
How can I get funding for my business?
Raising business finance can be challenging in any economic climate – the past few years in particular. Whether you need to raise finance for a new business or the expansion of an existing one, we can help you to find the right type of capital for the right price. Drawing on a wide range of skills and expertise, our team will work with you to determine what mix of debt, mezzanine, or equity funding to take on and the effect on your business and your cash flow.
We enjoy strong relationships with key providers of finance, including specialist finance teams within the major banks who provide leverage, asset finance and working capital funding. We also have in-depth relationships with private equity investors – institutional private equity.
HOW DO DEMERGERS WORK?
There are three common approaches to achieve a demerger, which will be appropriate in different circumstances. Each can have its own advantages, disadvantages and tax risks so careful planning is critical to make sure the transaction works as effectively as possible and any risks are managed and restructuring and demergers can take place.
Statutory Demerger by exempt distribution: Often the most straightforward to implement but tax reliefs have prescriptive conditions and complex anti-avoidance rules prevent certain share transactions within 5 years of the transaction.
Companies act capital reduction demerger: This is a popular approach as it is reasonably straightforward and can be used for both trading, non-trading and mixed groups but requires several technical steps and careful planning.
S110 Liquidation Demerger: A more established route that can be used for both trading, non-trading and mixed groups and companies but often more costly and complex to implement as requires the appointment of a liquidator. Company liquidations can carry a stigma.
Would my business benefit from Restructuring?
There are a number of reasons why a business may benefit from being restructured, for example to achieve operational efficiencies, to aid in raising funds or incentivising employees, or to separate or amalgamate business components when preparing for a sale, looking to improve business reporting and accountability or because the objectives have changed. Regularly reviewing a business’ operating structure is advisable to ensure that tax and commercial prerogatives remain aligned.
The tax environment applicable to corporate reorganisations is complex because a number of taxes are often applicable, and the way in which different taxes interact can create significant risks, as well as opportunities, that are often material. This is particularly the case where businesses are being separated or demerged, and where property is involved, where careful planning is necessary to provide certainty to any relevant parties and ensure transaction costs are managed.
Our team of specialist tax advisers frequently advise on corporate reorganisations, restructuring and demergers.
Will an Acquisition help with business growth?
Growth by acquisition can be a faster route than more general organic growth and can provide opportunities for business diversification. Acquisitions are, however, not without their challenges. Many fail to live up to expectations due to poor strategic fit, lack of an integration plan or failure to identify potential problems with the quality of earnings. We can help you to decide if growth by acquisition is the best route for your business and work with you to overcome any potential obstacles. Our team of specialist tax advisers frequently advise on business acquisitions, restructuring and demergers.
How do you dispose of company assets?
In our experience, almost all commercial transactions that involve acquiring, divesting, or restructuring assets have a significant tax implication. We work closely with our tax team to develop and structure efficient tax solutions, no matter how complex the deal.
Being primed for sale, whether to management or a third party, will ensure you realise the maximum value and reap the rewards you deserve for your lifetime of effort, as well as minimising your risks and liabilities post sale.