Selling a manufacturing business: Restructuring before the sale

The buyer of a manufacturing business made it a precondition that the company and an LLP through which it also traded were merged before the sale. Here’s how we helped the owners restructure while negotiations with the buyer continued.

A condition of the sale

This manufacturing business had two parts to its trade, one trading through a limited company and the other through an LLP. The buyer had no interest in utilising the LLP, nor did they wish to buy the trade and assets, so it was a precondition that the two entities were merged before the sale.

Agreeing the value of each part

The ownership of the two entities was different, and we helped negotiate between the different partners and shareholders of the LLP and the company. This began with a valuation of each business, answering numerous questions and adapting the figures until all parties were happy with them.

Merging the entities

Having agreed valuations, the company purchased the trade and assets of the LLP in exchange for shares in the company.

The LLP members who were not shareholders in the limited company were also likely to be required to become employees of the buyer, so employment contracts were put in place and salaries agreed. Negotiations with the buyer continued whilst the restructure was being undertaken.

Negotiating the terms

There were numerous conditions around definitions and the performance levels to be achieved in the first year. The buyer’s accountants and our team negotiated those key terms until both our clients were satisfied.

A successful outcome

The deal went ahead without any hiccups and has turned out to be a success for all parties.

Considering selling your business?

Selling your business is one of the biggest decisions you’ll make. Whether you’re considering a trade sale, a management buyout or exploring your options with potential buyers, getting the right advice early can make a significant difference to the outcome.

At A4G, we help business owners understand their options, structure transactions and plan for the financial and tax implications of a sale.

Thinking about selling your business? Speak to one of our Principal Advisers to discuss your options and how we could help you achieve the right outcome.