Selling your business
There are no one-size-fits-all solutions when it comes to financial planning – and coming up with a strategy to manage an entrepreneur’s wealth following the sale of their business is one of the most detailed, bespoke jobs a financial planner can do.
Clarion Wealth Planning’s financial planners have a very real understanding of your position. We are an owner-managed business that has grown by acquisition so our advisors include both purchasers and vendors of businesses. We understand the sales process and we know what it means to run your own business – and, in the end, to sell it.
Ideally the financial planning process should begin before you finalise the deal. While we understand that a business is worth what the market is willing to pay, no more and no less, we are able to use our lifelong cashflow forecasting capabilities to find out how much you actually need to sell for in order to maintain the lifestyle you want. This information might not change what the buyer is willing to pay but having clarity about what a given price means in terms of the lifestyle it will buy you will help you decide whether to do the deal at this point or not.
Not every business exit leads to the vendor’s retirement – serial entrepreneurs will sell businesses at all stages of their careers and a 35-year-old will require a radically different plan from a 65-year-old. We have the experience and expertise to put together both, and all stages in between.
One of the most important things any business owner can do when planning an exit is to look at Entrepreneurs Relief from capital gains tax (CGT). This currently applies to the disposal of assets of companies in which individuals have an ordinary shareholding of more than five per cent. This relief reduces the rate of capital gains tax to 10 per cent on the first £10 million of qualifying capital gains over the individual’s lifetime so, with appropriate planning, it is possible for a couple to pay just ten per cent tax on up to £20 million of the proceeds of a business sale or sales.
Another issue to consider is estate planning. Shareholdings in privately-held or AIM-listed businesses are exempt from Inheritance Tax (IHT) under Business Property Relief. The proceeds of any business sale will, however, attract Inheritance Tax. We can advise you on appropriate strategies to minimise this liability.
What goes into your ongoing financial plan will depend on how much you sell for, your ongoing commitments, the lifestyle you want to achieve or maintain, and whether or not you plan to retire from business. Whether you are hoping to make another business investment in six months’ time or plan to retire from business entirely and need help to discover how your wealth can open up new avenues and enable you to secure your family’s future and achieve your life goals, Clarion Wealth Planning can develop and maintain the right strategy for you.
To speak to one of our highly qualified financial planners please call Clarion Wealth Planning on 01565 653804 or send us an email.