Employee transfer business model


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Employee transfer business model

  1. 1. Exit Planning Business Model 06 July 2012Copyright © 2010 MA Consulting International Ltd
  2. 2. •Vision •The Process •Transfer to Employees Business Model •Copyright © 2010 MA Consulting International Ltd
  3. 3. VisionHelp business owners in Belgium, France, Italy and theU.K to find a win-win solution for all the businessstakeholders, the family and the regional economy totransfer their businesses painlessly and successfully totheir families or to sell them at an optimum price. Tools: Awareness Campaigns Guide on succession planning Professionals trained on succession planning Mechanism set up to help micro businesses owners to transfer easily and fruitfully their businesses to employees or management team Copyright © 2010 MA Consulting International Ltd
  4. 4. The ProcessCopyright © 2010 MA Consulting International Ltd
  5. 5. Employee Transfer Business Model To be adapted to country laws1. Direct ownership.• employees buy out the owner shares over a period of time. For instance, if the shares were worth £100,000, then the employees would pay the owner £20,000 pounds per annum over a five year period.• use loan finance accompanied by a business plan.• if the SIP holds on to at least 10% of the shares then the value can be written off against corporation tax.• The employees have to buy the shares back or the company can buy them back and then cancel them at the end of the 10 years if they have not been transferred.• The employee control funds out of the SIP if after three 3/5 years it will be free of any National Insurance Contribution and Income Tax. Copyright © 2010 MA Consulting International Ltd
  6. 6. Employee Transfer Business Model2. Indirect ownership• Owner’s shares transferred to an Employee Benefit Trust. Company gifts the money to the Trust.• EBT can issue shares to the employees or can be held for the benefit of the company.• EBT can hold the shares for 125 years. The EBT can receive a dividend but, or the dividend monies are placed in a Reserve Sinking Fund.• Trustees are a representative from the business the MD plus an employee and someone not involved in the business.• EBT has its own set of accounts separate to the company’s and are often dormant accounts.• EBT can issue bonus payments There is minimal tax on money out.• EBT can purchase property abroad by which the employees can use and purchase Health Insurance for the use of the employees Copyright © 2010 MA Consulting International Ltd
  7. 7. Employee Transfer Business Model3.  Hybrid• The business funds the purchase of the shares to the EBT with any share incentive plan (SIP) the EBT issues part of the shares to the employees and retains part.• EBT is managed by the trustees.• As the shares are held through a SIP there is a 10 year maximum holding instead of the 125 years under plan 2 above. Copyright © 2010 MA Consulting International Ltd
  8. 8. Management /Employees Succession  Funding Acquiring an existing, successful business can be financially rewarding, but requires access to capital we recommend to set up a regional fund made up of 2/3 private and 1/3 public funds.Who Should the fund  invest in? • an opportunity is identified to buy a regional business.• the business plan is sound and it meets the fund investment criteria,• the fund engage discussion on a commercial management succession deals.• The solutions can be: business loans and/or equity investment for employees or management successions. Copyright © 2010 MA Consulting International Ltd
  9. 9. Management /Employees Succession FundingA tailored investment to suit the business needs •Employees/Management successions can arise for a variety of reasons. • to increase their profits, • expand into new markets • consolidate operations in region • business owner’s retirement • large business regional closure•The fund will help the business to finance its ambitions • Loans • Mezzanine loans • Equity Loans Copyright © 2010 MA Consulting International Ltd
  10. 10. Management /Employees Succession FundingDeals the fund can be involved in:• Internal succession deals, including: • MBOs (management buy-outs) • Employee Buy-Outs where an existing management team or workforce purchases a business from its owners.• External succession deals, including • MBIs (management buy-ins) where a management team purchases all of another business’ shares or assets.• Corporate acquisitions. • Appoints a management team of it own choice. Copyright © 2010 MA Consulting International Ltd
  11. 11. Management /Employees Succession FundingInvestor Rewards• the yield will be calculated using the income distributed during the past year and expressed as a percentage of the mid-market unit or share price on the date shown.• expenses will be charged to capital• The fund will issue dividends, but they may not be invested only in equities (or shares). Copyright © 2010 MA Consulting International Ltd
  12. 12. Together we can make thefuture what we want it to be MA Consulting International Copyright © 2010 MA Consulting International Ltd