At the early or development stages of a business, you might be looking to take on investment and this is likely to involve either a loan to the company or the passing of shares to those investors. Both require careful thought, with entrepreneurs often believing that shifting a few of their own shares being a safe option. I would say that this requires careful planning if not to end in tears in a few years, in the absence of different sorts of shares, proper planning and written agreements, investors can begin to feel like millstones fairly quickly, particularly those who want to exert control.
On the other hand, canny investors who are being relied upon for their expertise can be recompensed and worked with to enable rapid growth. Again, though, get it in writing!
We also help business owners think about succession planning which allows for the business to think about the owners’ retirement, passing the business on to the next generation or whatever the current owners want to achieve ‘at the other end’. It’s vital for business owners to consider what might happen in a worst-case scenario so that their private plans form a seamless solution with their business objectives and provide their families without conflict: for example, shares need to go in the right direction and not be caught up on absent or badly drafted shareholders agreements, wills or intestacy.
Some owners may want to pass the business on to their management team, often bit by bit. This is known as a management buy out or “MBO” and proper planning allows the expertise and loyalty of the management team to be rewarded while protecting the hard work put in by the founders.
Whatever you’re looking to achieve, we will work closely with you and your accountant to ensure that all the angles have been looked at and you’re free to focus on what’s important.