Podcast 07 Season 02 - Shane Connors Selling your business.

absolutely and a lot of people you know they they don't actually appreciate while while while it may give them the same net result in that you know they've they've transferred ownership or whatever it is the way it's structured is very important because back to your back to your point there about about share redemption so a share redemption actually means um that the uh the individual gets the um gets the money whereas in some cases if if for example it's it's uh If, for example, it's an asset sale, then potentially, believe it or not, you pay tax twice on an asset sale because the company gets the asset.

The company sells the assets, it gets the cash, and then the owner themselves needs to extract that money out.

So in some cases, it can be that actually you get a double tax hit.

So having all of that stuff, having an understanding of all of that is very important because that will ultimately determine the direction you go, the structure you put in place.

But then also when you are sitting down with your legal advisor, that they have a very clear picture as to where you want to go.

Yeah.

And like it's having a meeting with them to say, this is what I'm planning to do.

So the goalposts don't change two or three months down the line and you're scrambling to try change paperwork because it's not even OK.

The agreement itself, the contract of how you sell or close, that's fine.

But there's an awful lot of other paperwork to go through with the companies, the resolutions.

And that's, again, back to your account.

So tell me a little bit about that side of things.

There

is.

Yeah.

And that's an excellent point.

And sometimes sometimes as well, one of the one of the critical things that I always One of the first questions I ask a business owner when we're looking at this is, is the let's assume they're let's assume they're trading as of a out of a premises do they own the premises or is it in the isn't it the company or or or is it or is it or is it owned by a third party because that can determine a lot of the time that can determine um how you want to structure the transaction so talking you through in in very in very high level terms if the freehold property is in the company it may well be that if you're selling to a third party or even to a family member they can't afford to buy the property because the property might have might be a significant might have a significant value.

So it might be a case that you're saying, I want to sell the trays and everything around us, but I want to keep the building or I want to I want to start charging rent to the company so that it's part of my pension fund.

So in order to do that, you might actually have to look at it and say, well, do you know what, we actually need to set up another company here to potentially move the property across.

Or it might be that you can find some way that you transfer those into your own name and then you're left with selling the trade.

The other option is, as I alluded to earlier, you decide you're going to leave the property in the company and you sell out the trade, but then you've got the problem where potentially you've got cash in the business and how do you get that out? And the most tax efficient way of getting it out is actually to liquidate the company.

But if the property is in the company, then you can't liquidate the company.

So there are a whole number of steps that you need to just consider.

So ever before you get to the legal process, right? Those are kind of the key questions.

And it's really a question of, Understanding your options, understanding the various implications of whichever route you go down, that allows you to make more informed decisions and ultimately guess a better price for it.