In the ever-evolving landscape of business, ambitious plans for growth often collide with the harsh realities of the current climate. As energy and operational costs continue to rise and workforce shortages pose challenges, many business owners in 2023 are finding themselves at a crossroads of deciding between their growth plans and their bottom line.
With many owners considering ways to adapt their operational models in a high-risk market, there’s great potential for innovation, and restructuring can play a significant role in this transformation. However, the thought of restructuring can often evoke panic and reluctance among business owners, who fear that it will necessitate extensive and costly changes across the entire organisation. In reality, that is not always the case.
What is Restructuring?
Restructuring optimises operations and efficiency by making strategic changes within a business. It involves assessing and adjusting areas that are not working, such as structure, processes, and resources, to enable adaptability. This proactive approach helps companies stay ahead, navigate uncertainties, and achieve long-term success. But what does restructuring really entail, and how can it turn challenges into opportunities?
Growing in an unpredictable climate
We recognise the challenges many business owners are facing and at Haines Watts, our commitment lies in assisting businesses in not only weathering the storm but also capitalising on new opportunities. Restructuring can be a great way to mitigate potential risks through a well thought-out plan. We have encountered numerous scenarios where our expertise has proven invaluable, such as when we partnered with a niche company that aimed to expand and acquire their own premises.
Situation: A Profitable Niche Company with Risk Concerns
The company in question operated in a niche market and boasted substantial profitability, primarily relying on one major customer. With a sizeable cash balance, the owners had ambitious plans to invest in their own premises. However, they were apprehensive about consolidating all their assets in one company, considering the unpredictable nature of the industry. Through our collaborative approach, we worked closely with this client to understand their objectives, identify challenges and devise strategies for long-term success.
Our Solution: Mitigating Risks and Enabling Growth
To address their concerns and facilitate their expansion our team at Haines Watts stepped in to support the owners in creating a new holding company and forming a group structure above the existing trading company. This strategic move allowed cash to flow between the companies without incurring unnecessary tax liabilities, ultimately enabling the holding company to purchase the desired trading property.
Outcome: Achieving Tax Efficiency and Risk Reduction
Through our expertise and diligent efforts, we successfully obtained tax clearances and stamp duty relief for the new share structure, which closely mirrored the existing structure of the trading company. The established structure not only allowed for smooth cash flow but also significantly reduced the risk of potential challenges from HMRC arguing that the company was no longer a trading entity.
By implementing this solution, we ensured that the company’s assets were effectively ring-fenced, minimising risk exposure and protecting the broader business. The owners could proceed with their expansion plans, confident in the tax efficiency and financial security of their newly acquired premises.
In an unpredictable business climate, partnering with a reliable and experienced advisory firm is crucial for sustainable growth. Haines Watts stands ready to be that partner, offering strategic insights, expert guidance, and innovative solutions tailored to your business needs.
By entrusting your business’s success to us, you gain access to our wealth of knowledge, extensive industry experience, and a collaborative approach that sets us apart. Together, we can navigate the challenges and capitalise on emerging opportunities, to help you achieve your long-term objectives.
Interested in finding out more about business restructuring? You can read our full guide and get in touch here