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.