Gearing up for a sale

Category: Corporate FinanceLeisure - Posted On: Jul 24 2018

EQ has recently began acting on behalf of a leading food and drink producer based in Scotland. The business decided to make the move after feeling that they had outgrown their existing advisors.

At the initial meeting, the owner advised that a sale of one of their premier brands was a real possibility, though not imminently with a price of between £1m and £1.5m possible. The company contained several unrefined, diverse income streams and assets which had been put together inefficiently over a period of time.

How we assisted our client

The lead partner supporting the client on this case explained the issues involved in making a sale of part of the business. Some of the issues discussed covered the pitfalls of a lack of structure within a company, resulting in items likely to be considered as unappealing to a potential purchaser – meaning that the company was not ready to be sold.

After further discussion, it was determined that substantial shareholding exemption (SSE) may apply to the business and therefore a new holding company was created into which some of the company’s trade and assets unlikely to be sold were transferred.

Fifteen months on, the key brand and its related business held in the now clean subsidiary is about to be sold for £1.6m. Following the advice supplied by us, the disposal by the holding company of its subsidiary will be tax free with the proceeds being used to repay some business debt and to fund the expansion of other product development.

Developing a strategy and preparing the company appropriately will provide structure for the sale, making the process much easier, which can often lead to far better tax outcomes amongst other benefits.

If you’d like to discuss how EQ can assist your business, please contact your local office or email