corporate finance 41 Selling your business without


a third-party purchaser What you could do if you can’t sell your business to a third party. Think outside the box, writes Jonathan Walton, partner, Whitley Stimpson


Quite recently, we were instructed to groom for sale, and then sometime afterwards prepare a prospectus for the disposal of the entity for a successful trading company with over 25 years of profitable history. The company had a blue- chip customer base and by the time of disposal, a decent workforce.


We asked the managing director, who held the majority of the shares, what his expectations were: they were not unusual; he wanted as much cash up front as he could, and whilst he didn’t mind deferred consideration as part of the deal, he certainly didn’t want deferred contingent consideration. He was happy to remain in the business for a smooth handover, partly so he could ensure continuity for his employees and his customers, many of whom he had a long association with. The reputation of his business meant quite a lot to him and he cared about what happened to it.


During the process of grooming for sale, we had been very active. His management team were valuable – some were ‘locked in’ through


employee share ownership, his management reporting was good and we had improved his cash collection and billing process.


Of course the corporate finance market has picked up now and banks say they are more willing to lend, but it seemed to me that there was a much easier way for my client to achieve his ambition.


So, with no immediate purchaser on the horizon, I put it to him that his employees should club together to consider the acquisition of his shares – or a substantial shareholding and that he could consider to use company funds to facilitate a buy back too. The price after all would have been the same if he had sold to a third party.


We then set about the process and procedures that would need to happen, after taking consideration of the Companies Act 2006, the relaxing of rules providing financial assistance for such buy backs and the rules about a controlling shareholder who is retiring as a director within HMRC guidelines. Getting the tax


structure right is tricky and needs to be planned carefully.


And the result? Everyone is happy. My client has his money, has kept some shares, is continuing as a consultant, has passed his legacy to those he groomed and trusts, and the management team now have more ownership with a positive attitude to drive the reputation of the business forward. His customers are delighted as it’s business as usual.


For further information about Whitley Stimpson visit the website.


Details: www.whitleystimpson.co.uk


INVOICE FINANCE//STOCK//P&M//TRADE//PROPERTY


You build the business. We’ll build the confidence.


The flexibility and expertise of an independent, together with the strength and extended product range of its parent, Bank Leumi (UK) plc, make a winning combination. Specialising in structured ABL facilities up to £25m with exceptional levels of client service.


Leading recruitment specialist required flexible funding to support growth


Leumi ABL provided


£20m package including CID facility + finance from Bank Leumi (UK)


Creative production agency required funding to facilitate office move and support growth plans


Leumi ABL provided £1m CID facility + £150k agreed overpayment


To find out more about the Leumi ABL approach to business call Jonathan Hughes on 07584 630762 or email jhughes@leumiabl.co.uk or visit www.leumiabl.co.uk


Brighton n London n Birmingham n Leeds n Manchester n Reading


THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER13/JANUARY14


www.businessmag.co.uk


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