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Dear Rob&Roderic…

Our resident agony uncles and The Ideas Lab directors Rob Reid and Roderic Rennison answer adviser questions

Q: Business sale
I want to retire before 2012 and I have been made an offer for my business but it is to buy the assets rather than the shares. I am not sure this is advantageous from a tax perspective. What do you think?

A: Rob
You should ask the acquirer if they will make an alternative offer for the shares so that you have a comparison. Also, I would strongly recommend that you seek other offers to create what is sometimes referred to as “commercial tension” as this should help you establish not only the best structure for the sale but also the best price.

A: Roderic
You are absolutely right to give careful thought to this aspect as the emergency Budget this summer following the election increased the attractiveness of the share sale route. Suffice to say that you would need to be paid a lot more for your business if the transaction is to buy the assets and you also need to be aware that you will still be responsible for the liabilities. You should seek legal and tax advice before committing yourself.

Q: Buying shares
One of my directors wants to sell me his shares as he doesn’t want to sit the exams and carry on after 2012. How should I deal with his request?

A: Rob
I think you need to be commercial and treat the negotiations as if you were acquiring another firm or a book of business. You have worked with the individual so you should have a good appreciation of his clients and their value but you still need to pay only what is a fair price if you are to continue to run a stable business.

A: Roderic
You need to start by looking at what your company’s memorandum and articles say and also any shareholders’ agreement as there will usually be a basis for valuation set out. You also need to be comfortable with the obligations you will be taking on and to give careful thought to how the firm will best be structured. For example, would you need to take on another adviser to service his or her clients and do they fit with the propositions that you want to offer?

Q: Moving firms
I want to leave my current firm and move to another firm taking my clients but the directors are threatening to sue me as they claim that they own the clients. Are they correct?

A: Rob
Read your contract and take legal advice. Think also about what you are and are not allowed to do regarding approaching your clients once you have left. Solicitation clauses vary and you need to tread carefully. If you get involved in legal and court costs they can mount up quickly so while it is worth getting an initial legal opinion, think carefully about risking further costs unless you are advised you have a strong case.

A: Roderic
It depends what your contract with your firm says and it would be for a court to determine if they are enforceable. I infer that you are self-employed and, if so, it would be usual to retain those clients that you brought with you and perhaps also the clients you have brought on board since you have been there, depending on what the contract says. This is not the moment to scrimp. Take legal advice before you make any decisions.

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