Exit Plan/Strategy options

I

ivorystraws

Registered User
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480
Hi,

I thought I asked this question long ago but I searched and couldn't find it.

I just would appreciate if someone can outline briefly the exit plan/strategy options to extract the value held by a small Irish business. For example, I know there exists the options to
  1. Sell the Company/Business
  2. Partner with another Company/Business/Investor
...but I'm sure there were four main options which don't spring to mind? Any ideas?

Thanks.
 
2 possible ones

Cease through liquidation/strike off etc
Company reorganisations i.e. merger/joint venture etc
 
Paddy199 said:
2 possible ones

Cease through liquidation/strike off etc
Company reorganisations i.e. merger/joint venture etc
Click to expand...

Thanks Paddy but I don't see how liquidation/strike off would extract the highest value from any business and isn't merger/joint venture the same as Partnering with another Company/Business/Investor"?
 
You asked this question about attracting investors some time ago.

http://www.askaboutmoney.com/showthread.php?t=54266

I think you have listed the main ways.

If you can't get a price equal to the assets of the company, you can cease to trade and voluntarily wind up the company. This way you will receive the assets subject to CGT.

You could also consider making a large contribution to your pension scheme which could take a lot of the assets out of the company.
 
Brendan Burgess said:
You asked this question about attracting investors some time ago.

http://www.askaboutmoney.com/showthread.php?t=54266

I think you have listed the main ways.

If you can't get a price equal to the assets of the company, you can cease to trade and voluntarily wind up the company. This way you will receive the assets subject to CGT.

You could also consider making a large contribution to your pension scheme which could take a lot of the assets out of the company.
Click to expand...

Thanks for the response Brendan but I didn't ask this particular question on that thread i.e. I'm looking for the main exit strategies for a company beyond what I've mentioned. The points you mentioned regarding the pension scheme etc are valid but that's not what I'm looking for. What are the main exit plans for any small business entity which would help extract maximum value?
 
Sell the business and leave the company with as much "cash" as possible and possibly put a lump sum into a pension, then wind the company up by way of a members voluntary liquidtion so that you only pay CGT and not income tax.
 
In a liquidation/strike off scenario, you can pay redundancy (tax free) and then the surplus is subject to CGT at 25%.

With a company reorganistion, you can avoid CGT by taking a stake in another company and pay redundancy.

Retirement relief may also be available if you are aged 55 and over. This essentially is CGT relief on leaving a business to a relative that works full time in the company. There are conditions so you need to plan.

As Brendan said, generally its better to sell the shares.

The key here, is that you need to plan an exit strategy for at least 6 years. There are clawbacks in most cases and tax planning can save you alot of money. For example, to maximise the redundancy, you should increase your wage in the last 3 years. For business relief, your relative has to work full time in the company for 10 years I think.
 
As Paddy199 says if the company has a large amount of cash it can be liquidated and the cash extracted subject to CGT.
Retirement relief is available on sales to 3rd parties up to €750,000. For CAT Business relief the person must have worked for 5 years on a full time basis.
 
OK, I can see the points made, thanks, but apart from liquidation, redundancy, retirement etc., I still have to ask what are the basic options in relation to a small Irish Company or Business? There are definitely more than these options out there available to Irish startups and SME's.
 
Talk to a corporate finance house to establish whether there is a reasonable prospect of a trade sale for the limited company. Might cost you a few hundred for consultations, but it would be a better source of exit options than an internet message board (notwithstanding the excellence of AAM).
For example options would differ depending on the size of business, is it high growth, is it in an attractive sector, what are the projections like, what management team, current revenue growth trends, EBITDA trends etc. The valuation process would vary extremely depending on these factors and others besides...
One area that people often do not raise is that in many cases the best way to extract maximum value from a business is to seek investment to grow.......
 
ivorystraws said:
OK, I can see the points made, thanks, but apart from liquidation, redundancy, retirement etc., I still have to ask what are the basic options in relation to a small Irish Company or Business? There are definitely more than these options out there available to Irish startups and SME's.
Click to expand...

What exactly are you trying to achieve? In your OP you mention exit strategy but in your last post you refer to startups and SME's?
 
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