Many businesses owned by two or more entrepreneurs reach the position where one or more of the owners wishes to sell up (or buy out the others). A purchase of own shares can be effective where there are sufficient reserves and shares have been held for five years. Where reserves are a problem, a new company management buyout may be a better option. Where a demerger is attractive, a statutory demerger is not possible if the business has investment activity. Instead, a liquidation demerger or a cheaper and more flexible capital reduction demerger may be chosen, but both have potential pitfalls.
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Many businesses owned by two or more entrepreneurs reach the position where one or more of the owners wishes to sell up (or buy out the others). A purchase of own shares can be effective where there are sufficient reserves and shares have been held for five years. Where reserves are a problem, a new company management buyout may be a better option. Where a demerger is attractive, a statutory demerger is not possible if the business has investment activity. Instead, a liquidation demerger or a cheaper and more flexible capital reduction demerger may be chosen, but both have potential pitfalls.
If you are not a subscriber, subscribe now to read this content.
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