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Creaseys develops growth share structure to help business owner with sales dream

The Challenge

In the course of our “Big Picture” conversation with the owner of a financial consultancy firm, we discovered that he wanted to sell the business in the next eight years. He wanted his senior team to be on board with this decision, and to motivate them by reaping the rewards of a successful sale, whilst minimising the tax payable on their shares. However, he was unsure how best to go about achieving this.

Our Work

Matt Neill, who heads up Creaseys’ Share and Business Valuations Team, worked closely with the owner and established a current value of £4.5 million.

The Creasey’s team then explored how the senior team could be incentivised to grow the business, whilst minimising the tax payable on the shares issued to them.

After modelling various scenarios, we concluded that the optimal solution was to create a new “growth share” class for the senior team which would give them rights to enjoy 20% of the sales proceeds over £7 million.

Achieving the Big Picture

 

Our client has preserved the first £7 million of value when he sells his business, and he has achieved the buy-in of his senior team, who have a strong incentive to grow the company and unlock their right to capital in the future.

The tax payable by the owner on the issuing of the shares will also be also negligible, because the current value of the business and the growth share hurdle of £7 million are sufficiently distant.

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