Written by:
Senior Partner
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Whether you founded the business, worked your way up from the shop floor or joined as a Director, when it comes to an exit strategy, you need sound legal advice to prevent legal problems. There are many ways a person can leave a business however there are multiple considerations to ensure the way in which you leave is handled in a manner that doesn’t damage the business and is structured to prevent legal problems. Exiting options are extensive, so before you decide on the best fit for you and your business, Peter Lynn & Partners take a look at some considerations:
Limitation of Liability
Some contracts may be dependent on you playing an active role in your business or guaranteeing payment, so if you have leased equipment or have accessed finance that your business requires to remain operational when you leave, ensure you check the small print.
Asset Ownership
Contracts with suppliers may state that if the business is sold, the contract ends and a new contract is to be negotiated. This may put financial pressure on the sale as contract renegotiations may result in higher costs or the supplier may pull out altogether. Look to renegotiate before you leave.
MBO
A Management Buy Out may be an appealing choice for both you and the management team as the business will be in experienced hands and there will be continuity however financing such a deal may be problematic.
Consideration needs to be given to how the buyout is purchased. If a loan, how will it be secured? When it comes to your payment, how do you want to be paid – a lump sum or a lump sum and a % of shares? Are there grants or loans available to help?
Expert advice is required to ensure all parties profit in a manageable and tax-efficient manner.
Phased Exit
Depending on your company structure and the relationship you have with both customers and suppliers, an immediate exit could cause irreparable damage to the business and brand.
A phased exit where you are retained as a director or act as a consultant for a fixed period of time facilitates a smoother transition and allows knowledge and contacts to be passed on in a manageable manner.
These are just a small series of considerations you will need to make before deciding how you will leave your business however what is clear is that for a profitable and effective exit, you require expert legal advice.
At Peter Lynn and Partners, we have extensive experience working with a variety of businesses from small, family-owned businesses to large, multi-site multi-million-pound corporations across a wide range of sectors.
Our Sales, Mergers and Acquisitions team combine experience and knowledge of the marketplace with excellent resources and contacts to provide a tailor-made solution to your exit.
To arrange a meeting with our team, please contact 01792 450010 or email info@plandp.co.uk
