Exiting your business

For some people their business is a separate entity that will continue after they retire. For others it is too closely dependent upon them personally and will simply come to an end when they stop working. Either way, a carefully planned exit strategy will enable you to optimise your position when the time comes.

Here are some possible scenarios:

Passing on your business to your children or other members of the family. You will need to be careful in your choice of successor, especially if some of your capital will remain tied up in the business. You will need to use the right mechanism to effect the transfer and make sure your plan is tax effective.

If you are passing a company on to family members, do not overlook the fact that you can appoint them as directors and hand over the day-to-day running of the business while retaining control of the company through your shareholding.

Selling your share in the business to your co-owners or partners. This might already have been considered and incorporated into a partnership or shareholders agreement. You will need to be able to place a value on your share in the business – or accept a return of capital plus an annuity from your partnership. We can help by advising on agreements, valuing your business and making sure the arrangements are tax effective.

Selling the business to a third party. Again, you will need to have an idea of the value of your business and to ensure that valuable tax reliefs are claimed and that matters are set up in a tax effective manner. Maybe you are also concerned as to how the funds released by the sale can best be invested to provide you with a comfortable retirement (we work closely with financial planners and you to deliver these solutions) or to begin a new business venture.

Public listing or sale to a public company. This might be an option if you have a sufficiently large business, or a niche business attractive to a larger company seeking to expand its activities. A great deal of care and planning is required if you are to make the most of such an opportunity.

Selling your business to some or all of the workforce. Through company share schemes and pre-sale agreements you can reward your workforce on an ongoing basis in the form of equity – a stake in the business. Widening ownership of the business in this way might  enable control of the company to pass to the workforce on your retirement.

Winding up the business. If the business is simply going to come to an end when you retire you need to ensure that when the time comes you collect all monies owed to you and realise the value of the business assets. After all, these are an important part of your ‘retirement fund’. Again you will need to arrange this properly to minimise your tax liabilities and maximise your income in retirement.

Whatever plans you make for retirement, or for withdrawing from your current business, careful planning and the right advice are essential if you are to maximise your returns and feel good when you capitalise on your years of hard work.

If you would like to talk to us about Tax Free Business Sales as referred in our brochure, please give us a call.