Exit Planning: Selling your business
We advise corporate groups on tax efficient sales of subsidiaries, and other group transactions. If you hope to sell all your shares in a personal trading business, our valuation service will help you understand how much the shares are worth.
If you meet all the requirements for Entrepreneurs’ Relief (ER), the profit on sale can be taxed at 10%. It’s best to organise a business review at least a year ahead of any potential sale. This helps maximise your return, allowing time to resolve issues that could risk ER. Do all family shareholdings meet the requirements (at least 5% of shares, also an employee or director, and have owned shares for 12 months). Are there classes of shares with restricted rights? Is commercial property held outside the company? Has rent has been paid? Does the company hold too many non-trading assets? Are you planning to restart a similar business after the sale?
It is also worth reviewing factors that a buyer will use to knock down the sale price. Look out for PAYE or VAT issues to defuse before you start to negotiate. These might include benefits in kind on “pool cars” , incorrect past VAT recoveries, and other mistakes in VAT treatments of international sales of goods / services.
We work with your lawyers to make sure the sale offer and earn out is structured tax efficiently, and we help to anticipate likely negotiation points.
The best planning is done well before you identify your possible buyer. Even earlier planning will look at setting up family trusts, or designing share schemes to help motivate key employees to become stakeholders in your future success. Selling part of your business raises different aspects, also best considered well in advance.