Raise debt or equity to enable one group of shareholders to buy-out the others
It is inevitable that the ownership of a private company will change over time. Changes in personal objectives, retirement, succession and family dynamics all lead to the requirement by some shareholders to make liquid their holdings.
The more successful a company is, the more likely an internal change in ownership structure will require access to outside sources of finance, to support remaining shareholders in buying out those that want liquidity.
Facilitating and supporting these changes requires insight and sophisticated expertise in how to balance the needs of individual owners and family groups with the objectives of the providers of finance, without damaging the health and potential of the underlying business.
The company needs to be valued and the valuation agreed with all shareholders. A new capital structure for the business must be created along with a fundraising process. This work frequently gives rise to company tax, personal tax and corporate governance issues. It is not enough to simply raise the funds needed. Important changes in ownership frequently require different and more sophisticated tax planning. An orderly and smooth transition of ownership typically requires the remaining shareholders to review and agree their objectives for the company and enshrine them in a new shareholders’ agreement.
The partners of CGFP understand these issues and have worked with many families and owners to resolve them. Importantly, they have a network of accountants, lawyers and private company governance specialists who can ensure a successful ownership transition.