Making your business attractive to others
Selling a business can be a lengthy process in our experience possibly up to 3 years from appointing an adviser. So, what are some of the key considerations:
The structure of the business needs to be considered in order to ensure the optimal tax position on sale. The use of Entrepreneurs Relief can reduce the rate of capital gains from 20% to 10% on gains of up to £10 million per individual.
Maximising pension contributions prior to a sale. The funds can continue to grow tax free, even after the sale until you require them for your retirement.
Do you need to replace some of the benefits that you receive, death in service, private health cover etc.
Inheritance tax maybe due if you receive cash in exchange for shares. The shares may be exempt from IHT under Business Relief rules. The sale of the business may crystallise a potential IHT liability on death.
What to do with the sale proceeds? Is the money to be invested in another business? Is the money to be used to fund a lifestyle? Or a combination of the two.
If the proceeds are to be invested for the future, then ensure you are aware of the risks involved and that you are aware of your attitude to risk factors.
Consider potential tax implications of any investments that you maybe looking at and what impact tax can have on future returns.
Modelling a number of different cashflow scenarios, including capital expenditure, gifts to children and family and other extraordinary expenditure, will help demonstrate the achievability of your future lifestyle.