Owner managers with successful businesses who are approaching retirement are faced with a number of options. One is to sell the business to a third party buyer. However, in some situations, the owner may prefer to give the management team the chance to acquire the business. This may be the case where a number of the following factors apply:
Where these factors do apply, there is a process with the strange acronym of a VIMBO, which stands for a Vendor Initiated Management Buy Out, which can meet the goals of the owner and manager.
In a VIMBO, the management team sets up a new company which buys the existing company. The owner is effectively paid out of retained cash in the business and from the profits of the company over the next few years. However, as the money is being paid for the sale of the shares rather than being paid as a dividend, the owner may be able to benefit from Entrepreneurs Relief and pay only 10% tax.
The reasons for using this route are:
Given that most high-profile competition law actions tend to involve the decisions of large-scale re...Read more
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