If you're starting to think about stepping away from your business, whether through retirement, handing it over to family, selling to key employees, or attracting outside investors, having a well-structured succession plan is essential. Without careful planning, you could end up facing significant and avoidable tax liabilities.
At Stratos, we specialise in succession planning for SMEs, owner-managed businesses (OMBs), and entrepreneurs. We take the time to understand your personal goals and business objectives, so we can develop a succession strategy that is both tax-efficient and aligned with your unique circumstances and long-term vision.
In many cases, effective exit planning involves careful pre-transaction structuring. For example, it may be appropriate to separate property assets from the trading business before the transition takes place. We’ll explore these options with you in detail and advise on the most suitable course of action to optimise your tax position and prepare your business for a smooth handover.
So if you’re thinking about passing the business on to the next generation, considering a management buyout, or exploring a company share buyback, we’re here to guide you every step of the way.
Collaborative Succession Planning Support
We work closely with your existing advisors such as accountants, solicitors, and wealth planners, to ensure a smooth and cohesive succession process. Our collaborative approach helps avoid miscommunication and duplication, giving you peace of mind that every detail is handled professionally.
Our experience includes advising business owners in a wide range of scenarios, such as:
- Succession where there is no external buyer and the company purchases shares directly from the exiting shareholder (known as a company purchase of own shares)
- Management buyouts where the incoming team doesn’t have upfront capital to complete the purchase and instead the consideration is funded through the future profits of the business
- Transitions to family members or long-standing employees, requiring sensitive handling and structured planning
- Employee Ownership Trusts (EOTs), allowing owners to sell a controlling stake tax-free while securing the long-term future of the business under employee ownership
Tax-Efficient Exit Strategies
Tax is a key consideration in any exit. We help you minimise your tax exposure by advising on reliefs such as Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) and other relevant options.
But our support doesn’t end at the point of exit.
We can continue to advise on your personal tax planning, including Inheritance Tax strategies, to ensure your long-term financial goals are protected. We can also assist with all necessary compliance requirements post-exit, such as preparing and filing your Self-Assessment tax return and ensuring that any gains are correctly reported and supported with the appropriate documentation for HMRC.
Why Stratos?
At Stratos, we specialise in succession planning for SMEs, owner managed businesses and entrepreneurs. We assist our clients by offering expert, tax efficient solutions tailored to their specific goals. We provide clear, strategic advice supported by practical experience. We work seamlessly with your existing advisors to deliver a coordinated service and continue supporting you post-exit with inheritance tax planning and compliance, including Self-Assessment and HMRC reporting.
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Case Study
Transitioning the business to a trusted management team
The Challenge
A client was referred to us by their legal advisor, who had been in early discussions about succession planning. The business owner was looking to exit but felt that a trade sale to a third party wasn’t right due to concerns around culture, and continuity. They needed a clear understanding of alternative options that would safeguard the future of the business and reward loyal employees.
The Solution
We carried out a full review of the client’s objectives, the business structure, and the available succession routes. Together, we considered various options, including a sale to an Employee Ownership Trust (EOT) and a Management Buyout (MBO). Given the nature of the business and the presence of three key employees well-positioned to lead it forward, an MBO was identified as the most suitable path. We also implemented pre-transaction structuring to extract property assets from the trading company in a tax-efficient way by way of a demerger, preparing the business for a smooth transition.
The Value
The MBO enabled the shareholder to exit on their own terms while ensuring continuity under a trusted management team. The consideration was structured in two parts: an upfront cash payment and a balance paid over four years through vendor loans funded from the company’s profits. The exiting owner was able to achieve a tax-efficient exit while remaining involved in the business on a part-time basis to support the new leadership during the handover.
We also assisted with HMRC reporting of the transaction and the preparation of Self-Assessment tax returns to declare the capital gain.
The result was a successful, compliant transition and a secure financial outcome for the exiting owner—while the business continued to grow under capable new leadership.
FAQs
Yes, it is possible to transition your business to family members or employees without requiring them to personally fund the transaction upfront. Common approaches include a Management Buyout (MBO) funded through vendor loans where the outgoing owner receives part of the payment upfront and the balance over time from the company’s future profits, and the use of an Employee Ownership Trust (EOT), where the business is sold to a trust on behalf of the employees, with the consideration similarly paid out of profits over time. Both options can provide a tax-efficient exit for the owner while allowing for a smooth succession and business continuity, without placing financial pressure on the next generation of owners.
In a Management Buyout (MBO), you as the seller typically do not pay Stamp Duty. However, if the transaction involves the sale of shares, the buyers (usually a new company) will usually be liable for Stamp Duty at 0.5% on the consideration paid, if it exceeds £1,000.
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Related Services
Business Sales
Employee Ownership Trusts
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