Sell out or not sell out?
Discussion
This may be a little random, but unfortunanly I can't go into any details at this stage, however I am after some advice from anyone how can offer anything constructive.
I own half a company. We have been trading for about 7 years and have grown consistently each year. We are profitable and even have a cash reserve. We have a lot of potential and would probably be able to triple our turnover within a year given the right circumstances.
We have recently been approached by a large company that is very interested in what we have achieved. As I said, we have a lot of untapped revenue potential at this stage and this stands us in good stead. My question is this. Do we sell out, make some money, stay on as top level management, but then watch big brother reap the rewards of our hard work, or do we say no thanks and carry on as we plan to, but never know if we are quite reaching our potential and have all the associated stresses of owning a company.
The reason I ask this here is because I am well aware that there are some very successful people on this forum and generally we're all a decent bunch! I could really use the advice of anyone who has been in this position before, or from anyone who makes it their living to acquire growing companies like mine. I am in no way attempting to create interest in my company. I generally don't like people knowing my business, however this has come about fairly suddenly and I have to get my head around it as quickly as possible.
Thanks in advance.
I own half a company. We have been trading for about 7 years and have grown consistently each year. We are profitable and even have a cash reserve. We have a lot of potential and would probably be able to triple our turnover within a year given the right circumstances.
We have recently been approached by a large company that is very interested in what we have achieved. As I said, we have a lot of untapped revenue potential at this stage and this stands us in good stead. My question is this. Do we sell out, make some money, stay on as top level management, but then watch big brother reap the rewards of our hard work, or do we say no thanks and carry on as we plan to, but never know if we are quite reaching our potential and have all the associated stresses of owning a company.
The reason I ask this here is because I am well aware that there are some very successful people on this forum and generally we're all a decent bunch! I could really use the advice of anyone who has been in this position before, or from anyone who makes it their living to acquire growing companies like mine. I am in no way attempting to create interest in my company. I generally don't like people knowing my business, however this has come about fairly suddenly and I have to get my head around it as quickly as possible.
Thanks in advance.
Without knowing any financials or even in a position to ballpark it or indeed your personal position it is difficult to give something more than very vague.
What I *will* say though that if you are of retiring age, or thinking about it the tax situation may work in your favour. Indeed, although the offer may be only worth 4 times your annual earnings after tax, the lower tax paid on the company sale actually mean you will take home what would be equal to what you would have earnt from ten years wages...
Indeed, with the money safely in the bank and the tax paid on it you can invest it wisely and you may find that 'the one in the hand' is worth a lot more than all but the highest potential scenarios of the 'two in the bush'!
What I *will* say though that if you are of retiring age, or thinking about it the tax situation may work in your favour. Indeed, although the offer may be only worth 4 times your annual earnings after tax, the lower tax paid on the company sale actually mean you will take home what would be equal to what you would have earnt from ten years wages...
Indeed, with the money safely in the bank and the tax paid on it you can invest it wisely and you may find that 'the one in the hand' is worth a lot more than all but the highest potential scenarios of the 'two in the bush'!
Edited by JustinP1 on Thursday 13th December 23:31
I would say you're possibly looking at it in too much of a black and white way, whereas there are many shades of grey. Supposing, for example, you agreed a deal structure where the buyer buys, say, 80% of the shareholding and you agree a formula for the purchaser to buy the remaining 20% anfter you've grown the company as part of a larger group. The deal structure is generally only limited by human imagination, good lawyers should produce a workable SPA which protects both sides. That way (a) you get some of the upside as the company grows; (b) The purchaser's comfort level is increased because you're genuinely motivated to grow the company post sale - and you won't be disappearing into the ether!
It's also worth remembering that if you've got some surplus cash in the business then the buyer can buy the cash £ for £, which means you only pay 10% Tax on this - in addition to the sale of the company (altough there are certain Tax rules to consider.)
It's also worth remembering that if you've got some surplus cash in the business then the buyer can buy the cash £ for £, which means you only pay 10% Tax on this - in addition to the sale of the company (altough there are certain Tax rules to consider.)
What is business to do when the government are providing such an uncertain tax environment?
I always thought that, whatever else, a government should supply stability and certainty and seek to provide reassurance in times of uncertainty.
Darling has so far just thrown the whole capital disposal regime into total chaos as he dithers and delays over what he REALLY intends to do. At the same time, he has provided his own deadline for the introduction of the new tax regime (5 April 2008) without telling anybody what the final regime will actually entail. So, as well as chaos, he has added panic into the mix. Well done.
This is just downright incompetent and arguably destructive to the business environment of the UK. Brown's premiership is shaping up to be an economic disaster of the highest order.
I always thought that, whatever else, a government should supply stability and certainty and seek to provide reassurance in times of uncertainty.
Darling has so far just thrown the whole capital disposal regime into total chaos as he dithers and delays over what he REALLY intends to do. At the same time, he has provided his own deadline for the introduction of the new tax regime (5 April 2008) without telling anybody what the final regime will actually entail. So, as well as chaos, he has added panic into the mix. Well done.
This is just downright incompetent and arguably destructive to the business environment of the UK. Brown's premiership is shaping up to be an economic disaster of the highest order.
Edited by Eric Mc on Friday 14th December 09:56
Nice decision to have to deliberate over!! 
I guess it depends on what motivates you...
What about the staff or management? Have you canvassed any thoughts or is that inappropriate at this stage? What about the other owner of the business, do they want to sell, carry on, don't care?
Of course you could tailor the deal to suit you and if they (the potential buyers) say no then continue as you are, you've lost nothing. Or ask for more money and likewise.
If you think you could triple the turnover, why not do that and then look to sell? Are there other potential suitors?
I think this quote from your first post is quite a strong one "do we say no thanks and carry on as we plan to, but never know if we are quite reaching our potential and have all the associated stresses of owning a company."..
Do you enjoy what you're doing and what you're providing, plus giving people employment, etc..? Would the new owner keep all of that in place or possibly destroy what you've built up?
Of course it depends on how much we're talking about..!! A few Ferraris, Lamborghinis and Astons later...
How long have you got to make a decision, is reads as though there's a small amount of pressure on you to make a decision quickly...
Take all the time you want, especially around this time of year.
Of course don't let the potential purchase make you lose your focus on the job, especially around this time of year!
I guess it depends on what motivates you...
What about the staff or management? Have you canvassed any thoughts or is that inappropriate at this stage? What about the other owner of the business, do they want to sell, carry on, don't care?
Of course you could tailor the deal to suit you and if they (the potential buyers) say no then continue as you are, you've lost nothing. Or ask for more money and likewise.
If you think you could triple the turnover, why not do that and then look to sell? Are there other potential suitors?
I think this quote from your first post is quite a strong one "do we say no thanks and carry on as we plan to, but never know if we are quite reaching our potential and have all the associated stresses of owning a company."..
Do you enjoy what you're doing and what you're providing, plus giving people employment, etc..? Would the new owner keep all of that in place or possibly destroy what you've built up?
Of course it depends on how much we're talking about..!! A few Ferraris, Lamborghinis and Astons later...
How long have you got to make a decision, is reads as though there's a small amount of pressure on you to make a decision quickly...
Take all the time you want, especially around this time of year.
Of course don't let the potential purchase make you lose your focus on the job, especially around this time of year!
Eric Mc said:
What is business to do when the government are providing such an uncertain tax environment?
I always thought that, whatever else, a government should supply stability and certainty and seek to provide reassurance in times of uncertainty.
Darling has so far just thrown the whole capital disposal regime into total chaos as he dithers and delays over what he REALLY intends to do. At the same time, he has provided his own deadline for the introduction of the new tax regime (5 April 2008) without telling anybody what the final regime will actually entail. So, as well as chaos, he has added panic into the mix. Well done.
This is just downright incompetent and arguably destructive to the business environment of the UK. Brown's premiership is shaping up to be an economic disaster of the highest order.
Absolutely! It's rather like running a business and telling your employees "I'll tell you in 6 months what I'm going to pay you and what budget you've got to work with - now get on with your work".I always thought that, whatever else, a government should supply stability and certainty and seek to provide reassurance in times of uncertainty.
Darling has so far just thrown the whole capital disposal regime into total chaos as he dithers and delays over what he REALLY intends to do. At the same time, he has provided his own deadline for the introduction of the new tax regime (5 April 2008) without telling anybody what the final regime will actually entail. So, as well as chaos, he has added panic into the mix. Well done.
This is just downright incompetent and arguably destructive to the business environment of the UK. Brown's premiership is shaping up to be an economic disaster of the highest order.
Edited by Eric Mc on Friday 14th December 09:56
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