So you are successfully running a private business and now it is time to plan for the Caribbean island! You should start your planning early, five years ahead is not too soon, and groom your business ready for your exit. You should aim to build a business which is profitable (ideally six figures) and, in particular, maximise the profits in the two years before any disposal. You should develop a strong second tier management team in order that the business is not overly dependent on you. If you supply products or services to a niche market your business is likely to be of a higher value. Arguably the easiest exit route will be through your management team. You should therefore plan to develop a strong team who have the skills and ambition to operate and develop the business after you have left. Your company could buy back your shares and with careful planning leave the management team as the shareholders. However, the total payment would be restricted to no more than the level of distributable profits in the company. Alternatively a Management Buy Out could be arranged in which the management team externally raise finance to buy out your interest. In this case the price may reflect market value and of particular importance is the team's ability to raise funding often with the assistance of a specialist Accountant. The most common exit route for profitable businesses however remains a sale to another business, referred to as a trade sale. You should engage a specialist Accountant or adviser to market the business, principally through researching and approaching a number of suitable purchasers who have the potential to make significant gains from the acquisition. Skilful presentation, marketing and negotiations can make a big difference. The key is to seek interest from several parties and thereby maximise the proceeds. Frequently the vendor is required to work for the new owners for a short period under a service contract and you should allow for this in your plans. Other possible exit routes include a merger or flotation on a stock market, although such circumstances are rare. The current capital gains tax regulations are very favourable for vendors but you should take advice and plan ahead to minimise your tax liability. Most importantly you should appoint an Accountant or adviser who has the experience, specialist skills and contacts to help you achieve a successful exit. Selling your business can be stressful and hard work but the potential rewards are enormous and well worth the effort.
Additional Group Services
Our corporate finance team are available to advise on acquisition/disposal of corporate businesses and our Insurance Broking department has considerable experience of insuring corporate risks.
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