Introduction

Our client is a business owner who has worked hard on building his business – a real entrepreneur. Having been in operation for a considerable number of years, the business is now on a high-growth path, with technology that could deliver strong growth over the next 3-5 years.

Now aged 60, he and his wife have 2 children still in full time education.

Resources to this point had been invested in the family home and building the business. He also has a small pension pot & part-ownership of a commercial building that is part-occupied by the business, but also generating rental income.

The Challenge

Our client sought Acuvest’s support to help him define his key financial objectives, to develop a plan to assess the cost of them, and then a structured approach to ensure they are achieved.

A primary objective is to realise value from his business in a tax efficient manner.

He is conscious that his fellow shareholders are of varying ages, have differing financial circumstances, and his objectives might not fully align with theirs. He also recognises the need for a plan around the shareholding in the commercial premises, that produces rental income in addition to housing the business. He feels it may be tax efficient for the business to borrow and buy the premises from the shareholders but recognises the need for advice on that.

While having plenty of energy, good health and a desire to potentially invest in another startup if he exits the existing business in the next few years, he is aware that he won’t be able to keep working forever. He needs a plan to secure the future and lifestyle of his family.

Our Solution

We spent time initially fleshing out and prioritising his various objectives and their potential timelines.

While his pension is smaller than ideal, we parked this – for now. The priority of the business is to further invest cash in the growth path, with pension a lower priority for some shareholders.

We sought a review of the tax planning opportunities, with a focus on extracting maximum value from the business using a blend of business exit / retirement relief, entrepreneur relief and pension funding.

The questions around the business premises were also addressed. The tax planning demonstrated that there wasn’t a huge financial pressure on having to sell in a hurry. However, we developed a short to medium term plan to sell the premises to a third party, as it isn’t an asset that will add value to the business.

We also introduced our client to a corporate finance business in our professional network. They will help prepare the business for a sale process – either on an opportunistic basis, or through a proactively managed sale process.

The Results

We have a very satisfied client. He now has a clear sense of where he is today and clarity about achieving his future financial objectives. He now has a plan for the sale of the business over time and a plan for the premises.

He is comfortable that his pension challenge is deferred for now, with it on the list for review when more cash becomes available to make additional contributions.