Company/Group Reorganisations and Share Buy-ins

We have been involved in a number of reorganisations – these crop up for a variety of reasons. Usually it is to do with the people running a small or medium sized business. Sometimes it is to allow for retirement and succession planning and occasionally because the directors have fallen out with each other.

We have worked on simple schemes where – with the right tax planning – a new company can be formed to acquire the shares of the director who is staying with the business and to pay out the director who is leaving. Suppose father owns 60% of the company and son owns 40% of the company and father wants to retire. The new company makes an offer for all the shares in the old company – the offer being 1 share for 1 share or an agreed amount of cash for each share. Father takes the cash and son takes the shares. The result is that son now owns 100% of the shares in the holding company and the holding company owns 100% of the shares in the original trading company.

We have also worked on more complex cases where a group of companies has been involved and the business needed to be split. This is just a slightly more complex version of the above and usually involves a new holding company plus a new and separate independent company into which assets are transferred for the benefit of the director who is “leaving”.

If we can’t sort out the technicalities, “we know a man who can” as we have contacts with several of the largest firms of accountants and can use their expertise selectively which tends to reduce costs.

For the non-technical bits, we advise you to look as far forward as you can and to avoid getting into “locked in” positions as between directors and/or shareholders from which it is difficult to retreat. Asking us before the problem really erupts and before the problem becomes really urgent, helps us to help you.