Business Succession and Company Structure
We are often asked to review, the corporate structure of a client, with a view to preparing for a sale. This can be as part of a wider succession strategy when a client wants to wind down and retire.
The key is lots of forward planning, especially consideration of the tax and practical consequences, well before listing for sale.
Frequently, clients need to separate the risks in the business and prepare a structure so that is more easily acquired by a third party.
An example of this is introducing an interposed Holding Company.
The main purpose of a holding company, is to secure the key assets, such as intellectual property (trademarks, patents, domains), key equipment and cash. These are the key assets that you may want to protect from unexpected liabilities and legal claims.
An operating company typically conducts all of the sales, has the business liabilities and contracts with customers, suppliers, employees and lenders.
A third party looking to buy the key assets, may not be interested in assuming the current or historical liability for business trading activity over a number of years conducted by the subsidiary operating company.
If you are looking at selling down the business, we recommend getting strategic legal and accounting advice well prior to offering the assets for sale. Call us now and ask us how. Tony.Crilly@Perspectivelaw.com 07 3839 7555