Providing for Your Future

Are you a business owner and thinking about disposing of your business or transferring it to your children? Even if you do not intend to exit your business for a number of years, it’s important that you obtain professional advice well in advance of a sale/transfer of your business to consider:

  • The value of your business Commercial aspects that may arise on sale

  • The tax implications and also the tax reliefs that may be available on the disposal

Tax considerations on a sale

The gain arising on an individual’s disposal of their trading company would normally be liable to Capital Gains Tax, which is currently 33%. There are a number of helpful tax reliefs that may be available to reduce the tax arising on the disposal.

All of the tax reliefs have varying conditions including time-related ones. The Holding Company Exemption is a significant relief as it can provide that the disposal of a qualifying trading subsidiary may be tax exempt, subject to satisfying qualifying conditions.

 It’s never too early to complete a tax review of your personal position and also of the company structure to ensure that: 
  • The company is structured as efficiently as possible throughout the various stages of your business from growth to your exit
  • That you can obtain the relevant tax relief on your exit which depends on your particular circumstances and the valuation of your shares

There can be various issues to be addressed in claiming tax reliefs and structuring your exit. Following on from the above, a tax review should be carried out to consider for example:

  • Do you and your spouse both work in the company? If so, does one spouse own all of the shares? Do both spouses satisfy all of the conditions of
  • Retirement/Entrepreneurs’ Relief? If so, the shareholding should be reviewed
  • so that both spouses may be eligible to claim Retirement /Entrepreneur’s Relief. Do all shareholders qualify? For example, do they have the minimum shareholding requirement?
  • Are there investment assets or excess cash held in the company? Is a restructure of the company required as a purchaser may not wish to acquire these assets?
  • Is your company worth in excess of the Entrepreneur’s Relief threshold of €1 million? Consideration could be given to establishing a Holding Company and claiming the Holding Company Exemption.
  • Does the company own the trading property? A restructure may be required to separate the trade and property if the purchaser does not wish to acquire it.

The right corporate finance team empowers you

You should rely on a corporate finance advisor that has gained wisdom by completing large numbers of deals ‒ and seen some failed deals too. For the most important sale you’ll ever close, it is critical to engage the right corporate finance advisor who can empower you along the deal process, from start to finish.

Our experienced corporate finance team will enhance the value of your business and increase the certainty to close by providing these key seven skills:

  • Multiple deal options – the only way to know if you’ve received the best possible offers for your business is through a competitive process among buyers, including those you’re aware of and those you never knew existed. A strong corporate finance team has the capabilities, commitment and processes to present you with a range of options.
  • Negotiating skills – while you may be able to skillfully negotiate various transactions related to running your company, the team working on your deal is better positioned to garner the highest value and best terms for your business.
  • A buffer between you and buyers – staying focused on keeping your business growing and profitable is crucial during the marketing and sale process. It is best to let professionals take the lead in negotiating value, deal terms and critical deal issues with buyers and other professionals throughout the transaction.
  • Early warning system – The PKF corporate finance team will be able to recognise when the other party is not sincere or when the certainty of closing a deal is low. You don’t want to waste time or share sensitive information with a buyer who is displaying low odds of completing a successful deal.
  • Guidance based on market trends and dynamics – understanding current market value and terms is key to setting realistic goals. The PKF team can identify and convey hidden value to buyers so you can receive a premium to market benchmarks when possible.
  • Creativity and resourcefulness in resolving deal issues – anticipating business issues that are likely to arise in due diligence and preparing management to address them will reduce the risk of a broken deal. Since few businesses have no shortcomings, challenging issues may arise either before or during due diligence which will require corporate finance creativity to resolve.
  • Maximum deal control to your advantage – the deal journey can be formidable. Corporate finance advisors are skilled at controlling the sale process and driving to the closing date
Please contact the team at PKF today for further advice or assistance.