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  Business Advice

The Process To Think Through When Selling Your Business

The Process Of Selling Your Business

Selling a business is time consuming, emotive and can be costly if not executed correctly.   As we emerge from the rollercoaster of lockdowns over the last eighteen months, our economy is starting to roar back into life, and as a result, there is an increased interest in SME's across all sectors from both trade and private equity buyers. This, coupled with the availability of both debt and equity funding, makes it an opportune time to consider an exit strategy.  In this article, we explore a range of considerations when selling a business.

Preparation

Preparation is key to achieving the best value. The preparatory phase is when you should engage with your adviser and thoroughly review the business and its value drivers. Ask, 'why would someone want to buy my business" and then focus on this.   Prospective purchasers will demand transparency, so dealing with potential red flags and 'deal breakers' in advance of the buyer due diligence process will help protect value.   Telling your businesses story is essential and understanding how to present its financial information, both historical and forecast, is a crucial element of the process. What is the succession plan? With many owner-managed businesses, the owner is the business. A potential buyer will attribute little value to a company where its driving force (the owner) will be exiting or retiring in a short period after the sale.   Early tax planning protects value. The shareholders should consider the tax implications in advance of the process as time is of the essence where restructuring is required to effect a tax plan. Early key questions to be answered;
  • Is there an opportunity for family members (children and siblings) to be involved in utilising tax reliefs such as business asset relief for capital acquisitions tax purposes? 
  • Is there an option to claim retirement relief or entrepreneur relief for capital gains tax purposes?
  • Is there an option to review the group structure as a holding company can be beneficial when selling all or part of a business?
Perhaps the desired solution is a hybrid approach, providing a portion of the business to the next generation while selling a portion externally to generate some funds personally.  It is crucial to consider the tax considerations above with the overall commercial plan. 

Identify Prospective Purchasers 

Understanding and researching the potential buyers for your business is an essential part of the process.  Every business owner can name several potential buyers, be that a management team or a key competitor.  However, other potential buyers may not appear on a list, may have different strategic reasons for buying and may pay a premium for the business, i.e. new market entrant, acquiring IP, or gaining access to resources (e.g. people).   Keeping the process confidential during these early stages is vital as it may 'spook' potential customers or suppliers or unsettle critical employees. Having an adviser on board will help maintain confidentiality.  

Negotiating The Deal 

Once potential purchasers are identified, they may enter a period of limited due diligence.  Much valuable insight can be gained during this period for the vendor, regarding how the due diligence has conducted the type of queries and questions raised. Having this insight early on will help in the price negotiation phase.    It's not advised to name your price, solicit offers for potential acquirers setting strict deadlines for offers. The seller must maintain control of the process at this stage.  A second round of offers may be required until a preferred bidder is selected, after which they may enter a period of exclusivity to carry out a more detailed assessment of the company.    This selection criteria should not be based on price alone, and factors such as, ability to execute the deal and sources of funding should also be considered.     

Closing The Deal  

Negotiating the transaction documents is the final part of the process and also very important for both buyer and seller protection.   Considerations will need to be given to the deal structure.  Will part of the consideration be based on an 'earn out' from future profits?  Will the owner-manager be required to remain with the business for a period post-sale to help with the handover of relationships and integration?  The sale process is a time consuming and very involved process for the business owner, and often management teams are distracted by the process taking their' eye off the ball' to the detriment of the business.      Getting your advisers involved early in the process will help avoid many of the common pitfalls and ultimately protect the value that in many cases has been built up in the business over many decades.  At Roberts Nathan, we have worked on many buy-side, sell-side and management buy-outs in the recent past, and we have a wealth of experience advising owner-managers through the transaction process.  Please get in touch with us if you would like to understand more, my details are in the link below: 
https://www.robertsnathan.com/member/derek-dervan/
September 9, 2021
  Business Advice

Bidding On The Right Contracts

Our aim at Roberts Nathan is always to add value to your business and to support you as it grows. To do this effectively we listen and we understand. Only then do we offer expert financial and business performance advice to allow you make better decisions for you and your business. When it comes to our business advisory services, one specific challenge we help our clients overcome is around the correct process for bidding on new contracts. Making a bid is a time-consuming process that requires a lot of effort for any business. Hence, it's imperative that you carefully choose the projects you want to pursue. While you can see a lot of potentially lucrative contracts in your industry, there are some that won't be as suitable for your business. This is why it is really important you have a system and methodology to perform a comprehensive contract bidding analysis that is in accordance with your long-term plan and fulfils your company's objectives. Factors to consider to ensure bidding on the right contracts Here are a few variables you should evaluate before bidding on a contract to ensure that you are making a decision based on an agreeable logic.
  • Profitability
The main thing is that there's no contract bidding on a project if it doesn't generate enough profit. To accurately estimate your project expenses, ensure you have an accurate and detailed accounting of your yearly labor and equipment expenditures. Incorporate taxes, insurance, workers' compensation, holiday pay, tools and equipment, and any other perks you offer your employees when determining labor expenses. After determining how much it will cost to finish the project, you must examine additional factors such as location, contract requirements, expected construction technique, and so on to decide if the project will be lucrative if you make the winning bid.
  • Potential
After you've established that the project is beneficial for your business, you must evaluate if your business is capable of completing it. Examine your existing backlog of future projects to ensure that you have the workforce, equipment, crew, and other resources in place to devote to the project when construction is scheduled to begin and finish it on time. It is also important to verify that your business is financially competent to finish the project, which means that you have the necessary bonding capacity and cash flow to complete the job without compromising your other commitments.
  • Long-term planning
Check if the project you're interested in bidding on aligns with your business's long-term strategy and objectives. Whether you want to expand your business or to grow the business into new markets or geographical regions? Or maybe you want to switch to private work, or maybe you'd like to take on bigger projects, like hotels or hospitals. Irrespective of the company's long-term plans, make sure you're discovering and pursuing projects for contract bidding which support those objectives. Project location, duration, scale and nature, competitiveness, client, and designer are things to consider when deciding about the contracts to bid on. 

How can we help?

From comprehensive business advisory to making bids, we provide you with the assistance for each of these business aspects. When you choose us for your bidding solutions, we'll simplify the process and show you how to create winning bids that will incur the highest profits for your business. In addition, we'll assist you with identifying allocation bases and dividing pools of expenses, compiling indirect costs, and calculating fair and attractive rates for contract proposals.  By working with the Roberts Nathan team, you can rest assured that all your contract bids will be made after comprehensive, thorough analysis of your resources which will guarantee to deliver your business the best possible returns.  Please reach out to me on
shane.meade@robertsnathan.com or feel free to give me a call on +353 (021) 494 3977 if you have any questions in relation to any part of the contract bidding process.
July 7, 2021
  Business Advice

Covid Restriction Support Scheme

As many businesses begin reopening their doors this week, the Revenue have confirmed those eligible for the Covid Restriction Support Scheme should be able to avail of two weeks double payment of the scheme in order to assist with restarting their businesses. See details of the Revenue press release here. As Revenue have reiterated in recent times, all reliefs such as the CRSS require up to date tax clearance certificates which mean the taxpayer must have all tax returns filed and payments made or debt arrangements agreed. At Roberts Nathan we continue to assist our clients both applying for and maintaining Covid reliefs. Feel free to contact us if you wish to discuss any Covid supports or any issues arising for your business as the economy reopens over the coming weeks.
May 12, 2021
  Business Advice

RN Podcast: 2021 – What is in store for the Irish tax landscape in the year ahead

Vivian Nathan, Managing Partner, welcomes Brendan Murphy, Tax Partner, to Roberts Nathan. Brendan joined the firm at the beginning of 2021 to continue the firms expansion and our commitment to providing our clients with dedicated specialist within specific sectors. On this podcast, Viv and Brendan discuss the opportunities Brendan sees for businesses from a tax perspective in the year ahead and what will be the key areas of focus for tax advisors. They also look at the impact to date of Brexit and how this will continue to effect trading between Ireland and the UK. Finally they will look at the cost Covid-19 is having on the Irish economy and what the future Irish tax landscape may look like.
We hope you enjoy listening to our podcast and if you have any questions regarding any of the points raised please let us know.
 
April 19, 2021
  Business Advice

UK Businesses – Do you have the correct Irish VAT number?

Check your VAT number VIES VAT number validation
No, invalid VAT number for cross border transactions within the EU
Since June 2019, companies registering for VAT have had to specify whether they wish for a “domestic only” or “intra-EU” VAT registration. The domestic only registration has helped speed up registration process for business seeking to register for VAT however, we have seen a number of instances where businesses are unaware of the need to include an intra-EU registration within their application. In particular we have noted many UK businesses applying for Irish VAT numbers on the basis of being a non-resident company with operations in Ireland and obtaining an IE VAT reg.  If the company is importing goods into Ireland for domestic only supply, then the domestic VAT registration is sufficient and they are charged Irish VAT at the point of importation of the goods into the EU.  Thus the domestic VAT registration applies only if the company is importing goods into Ireland, storing and distributing them here and not further distributing outside of Ireland. However if your company is looking to use Ireland as a new trading base in dealing with EU customers this will not be an effective VAT number for EU wide trading. So check your VAT number.  If you get the above message on the VIES system then it is only a domestic VAT registration. This will cause issues if you are bringing goods into Ireland and then intending to export them to another EU country as you will need to apply for an intra-EU VAT number.  It will be the exact same number but will need to be validated as otherwise your customers will get the above notice when the VAT number is checked for EU trading.  This causes an issue for your EU customers as you will not have issued a valid VAT invoice. We have helped a number of clients with this by amending their VAT registration and getting the option for intra-EU VAT registration. This requires additional information for Revenue which we can assist with. If you would like to explore further options around your business, please contact Brendan Murphy who would be very pleased to assist you. Brendan Murphy:
brendan.murphy@robertsnathan.com
March 31, 2021
  Business Advice

Revenue Update – Debt warehousing and Covid-19 supports

Last week Revenue began to write to taxpayers who are availing of debt warehousing and other Covid-19 supports. In relation to debt warehousing, Revenue are reiterating the need for all returns to be filed on time, even where warehousing is being availed of on payment. Any taxpayer availing of debt warehousing but does not have all tax filings up to date will be reminded to do so immediately or lose their entitlement to avail of the Debt Warehousing Scheme. Any returns outstanding will be brought to the taxpayers attention in the Revenue latest correspondence. For taxpayers availing of both Debt Warehousing and either the Employment Wage Subsidy Scheme or the Covid-19 Restrictions Support Scheme, they will be advised to bring any outstanding returns up to date within 21 days or their tax clearance will be rescinded and they will no longer be eligible for any of the support schemes. Revenue have also began a second stage of TWSS reconciliation, seeing employers who have availed of the scheme receiving a detailed reconciliation through ROS. Employers have until the end of June 2021 to review the information contained in the reconciliation by Revenue and accept, appeal or make any required adjustments to their claim by this date. It is also worth noting for taxpayers who are not availing of debt warehousing but do have tax liabilities outstanding that Revenue will seek to enforce debt collection of outstanding liabilities over the coming weeks as highlighted in a press release earlier this month. Finally, late filing surcharges for corporation tax returns had been suspended from March 2020, however Revenue have now confirmed that for corporation tax returns due between 23 March 2020 and 23 June 2021 (i.e. accounting periods ended between 30 June 2019 and 30 September 2020), will need to be filed by 30 June 2021. Corporation tax returns (including iXBRL financial statements if required) will be required to be filed on time from this period on to avoid late surcharges. If you would like to explore further options around your business, please contact Brendan Murphy who would be very pleased to assist you. Brendan Murphy: brendan.murphy@robertsnathan.com
March 30, 2021
  Brexit

Is Brexit Having a Damaging Impact on your Profit Margin? – Solutions Considered

As an Irish based accountancy and business advisory firm, Roberts Nathan assists frustrated UK and Irish business owners who are confused, worried, and uncertain where to turn to in a bid to maintain their turnover and profitability following Brexit.   Main Challenges of Brexit Companies in the UK have been approaching us to help them find a way forward when they experience one or all of the following challenges:
  • Extra Brexit-related charges for exporting into the EU means your profit margins are eroded and now it’s far less viable to continue to trade in the EU.
  • Your customers in Europe are being asked by couriers to pay VAT upfront on the goods being shipped to them, resulting in those customers becoming disgruntled and ultimately sourcing the same product elsewhere.
  • Delays at ports which means your customers are not getting their goods on time when needed.
  • More forms and paperwork resulting in more admin and headaches. Many businesses had to hire more staff to handle the extra admin - meaning more costs.
  Options Available to Overcome the Challenges Faced with the above challenges, our UK clients are left with only three options:   1. Continue to export goods to the EU as before Brexit Bite the bullet and pay the VAT and other charges yourself - instead of your customer paying these. For many, this isn't financially viable as profit margins will be eroded significantly.   Or   2. Stop exporting to the EU altogether The majority of clients have told us that without ongoing access to the EU markets, as has been the case for many decades, their businesses will be compromised and face the risk of closure.   Or   3. There is a final option - a solution which we recommend to many of our UK clients. We can set up and register your business here in Ireland through a subsidiary company, wholly owned by its UK parent. In circumstances where products are imported from outside the EU, goods can be shipped from Ireland to your EU customers, helping you to avoid various Brexit related charges. Your customers will receive their goods on time. We can assist you in dealing with the VAT matters arising in Ireland. This solution will allow you to keep running your business at the required profit margin you need while avoiding the Brexit challenges faced above.   If you would like to explore this valuable solution further, please contact Peter Roberts or Tomas O’Leary, who would be very pleased to assist you in considering this worthwhile option.   Please contact:   Peter Roberts:
peter.roberts@robertsnathan.com Tel: +353214217940 Or Tomas O’Leary: tomas.oleary@robertsnathan.com Tel: +353214217940
February 2, 2021
  Business

Do you help international companies enter new markets?

Join Aidan Scollard, Partner at Roberts Nathan, who in conjunction with Soft Land Partners will be speaking to professionals who help international companies enter new markets at this free online event taking place on Thursday 4th February from 4-5pm. Register your attendance by clicking here.
February 1, 2021