The interruption to what we used to call ‘normality’ has given us the head-space, opportunity, or possibly forced us, to tackle things we had knew we should, but the daily grind got in the way.
Whether it be from finally facing up to that ‘guilty drawer’ full of paperwork at home, to taking the bold and creative steps to re-think an entire business’ strategy, it has undeniably been time to grasp the nettle. With necessity being the mother of invention, business owners have perhaps more than ever devoted time to literal blue sky thinking as they first plan to survive and, eventually, thrive.
Here are 10 questions that will probably ring true now more than ever:
- Strategic focus
Should we still offer the same products and services to the same customers, in the same way?
Have we trimmed every bit of fat from every process, operation and simplified our procedures?
Do we still need our group structure? Is it a legacy from historic acquisitions or superseded strategies with dormant companies hanging around?
On the flipside of this, have we protected key assets or income streams from other potentially high risk divisions of our business by using an effective group structure? Does the relatively small additional administrative burden outweigh having all of our eggs in one basket?
- Time to cash in our chips?
Do we want to commit more energy to areas of the business that we know, deep down, aren’t at the heart of what we do?
Do we have the energy to keep going for the next few years to try to get back to where we were, or is it time to devote that energy to planning our exit or retirement and maximising value?
- What’s mine is mine(ish)
Are our shareholders’ objectives all still in sync?
Do we need to raise capital which will involve changes to our ownership structure?
Did we ever get that shareholders’ agreement sorted (and our Wills to protect our business and ourselves)?
- Fit for funding
Are we in the best shape and organised the best way to raise funds from lenders?
- Reorganising – Getting it done
Do we need agreement from anyone before we push the button? Things to check:
- banks/secured lenders
- shareholders/investors
- landlords
- customers and suppliers – change of control and termination
- regulatory approvals
- tax and asset values (a major factor – your accountant/tax adviser will be crucial in all of this)
- Balance the books
While dormant companies that have never traded are relatively straightforward to deal with, dormant companies with long-uncontactable shareholders, residual balances and share premiums accounts will all need looking at.
Are there inter-company balances that need to be moved or written-off?
- A taxing process
Where property, assets or even shares in other companies are to be transferred as part of a reorganisation, this may involve stamp taxes being paid. Your legal and accounting advisers should work hand in glove to ensure that the best path is chosen and you minimise any tax charges, and this may involve advance permission (‘clearance’) from HMRC to give you certainty on how you will be taxed.
- Your most prized assets
Your people! A reorganisation may involve the transfer of employment to another entity in the group. This will need to be done carefully to meet the relevant employment legislation, and to ensure a seamless transfer and continuation of employment.
- In sickness and in health
Pensions are also important – if your people are moving, then their pensions and benefits may need to also. This will need to consider any requirements of pension trustees and the regulator where relevant.
- By the book
Any corporate activity needs to be done carefully and, naturally, lawfully. Directors will need to ensure they meet their legal obligations and all stages are properly recorded and meet all requirements of the company’s constitution.
And just one more thing (OK…a few things!)
Company stationery, VAT, payroll, invoices, bank accounts, and group insurance policies will all need to be handled – your management team will need to be on top of this.
What comes out the other side?
If you’ve done this well, planned carefully and above all taken the best professional advice, then you can set the conditions to survive and thrive. If, along the way, you spot some opportunities to fix the roof while the sun is shining, and plug some gaps, then even better!
It’s a project, a means to an (hopefully happy and headache-free) end.
Robin Gill
Hillyer McKeown, Partner, Corporate and Commercial; Club Solicitor, Chester Business Club
T: 07584 147404