Tax Issues in MBO's

Learn the taxation pitfalls, risks, opportunities and issues in MBO transactions

A magnificent and large arch with an aesthetically beautiful design in a building

A half-day course presented in a virtual class from 9:30am to 1:00pm UK time

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Download: Course Category Brochure | Course Outline

The Mechanics of Management Buyouts and Their Alternatives

Trade Sales
Sales to Employee Ownership Trusts
Asset Sales
Sales of share capital
Reorganisations followed by sales – including Hive Downs and Demergers
Capital Gains Tax aspects – how to minimise CGT using Business Asset Disposal Relief

Due Diligence Issues to be Covered

Preparation of vendor due diligence reports
Advising a purchaser on due diligence matters to include corporate and employment tax

Stakeholder Issues

Equity incentives for management – navigating the potential conflicts of interest between management and other stakeholders

The Managers

Interest on money borrowed to buy shares
Capital gains treatment on the eventual sale:
- To ensure the maximum return on MBO investment
Availability of relief under the Enterprise Investment Scheme:
- To widen the potential investor pool
Potential income tax charges under employment-related securities legislation:
- To focus on the real risks associated with MBOs/MBO risks
- Complying with the “safe harbour” conditions in the memorandum of understanding between BVCA and HMRC
- Structuring ratchets to avoid income tax charges on the manager shares

Other Stakeholders

Negotiating with other stakeholders including Pension Schemes
Treatment of Intellectual Property – what stays, what goes
Accounting for goodwill

Using EMI Options to Recruit, Retain and Incentivise Key Staff

Creating mechanisms to incentivise staff once the MBO is undertaken:
- Qualifying companies
- Conditions to be satisfied by employees
- Exercise conditions, forfeiture, restrictions
- Disqualifying events

The Use of ESOTs as an Alternative to the MBO

The use of Employee Share Ownership Trusts – when might these work better?
The mechanics of setting up the ESOT

The Use of Flowering Shares as an Alternative Compensation Mechanism

Advantages
Considerations

Treatment of Debt

Junior
Mezzanine
Senior
HMRC challenges concerning the deductibility of interest. Including recent case law

Redcliffe’s tax issues in MBO masterclass sessions are delivered by the Director of a consultancy company specialising in taxation, share scheme advice, reward and lecturing. He has developed a specialised share scheme service for small companies and advises FTSE companies on communication. The lecturing covers most aspects of Direct Taxation but his particular interests include employment taxation and transfer pricing, which poses unusual conceptual challenges. Previous to this he worked for Henderson for nearly 9 years, leading the Share Schemes team for part of this time.

He took the level 7 CIPD Masters qualification whilst at Henderson. Before this, he was with Australian Mutual Provident (AMP) and helped set up one of the first Share Incentive Plans (SIP) for large companies in 2001. It was so unusual at the time that the Revenue phoned the trainer to find out how they could encourage more large companies to adopt SIP.

This trainer started his career in taxation and for the following 16 years worked in three of the “Big Four” accountancy firms. He became a Senior Manager with Deloitte & Touche, having worked on issues such as profit-related pay, share schemes, expatriate tax, tax investigations, reward management, US taxation, transfer pricing and corporate tax.

Away from work, he likes cricket, history, skiing, tennis and gardening. He gives lectures on history which helps keep his presentation skills fresh.

This tax issues in MBO masterclass is for participants to understand the tax and other fundamental issues which arise as a result of a management buyout.
We will start by looking at the potential alternatives to MBOs and their tax consequences.
It then looks at MBOs in detail and the tax consequences for buyers and sellers as well as the management opportunities.
This course finishes by looking at the potential equity incentives that would be available to offer to management to keep them aligned with the business.

This tax issues in MBO masterclass looks at management buyouts from the perspectives of all sides including vendors, purchasers, management and other stakeholders. Too often MBO tax issue training courses look at this area from only one aspect. This course works from the assumption that a challenge for one side is likely to become a challenge for other stakeholders.

Tax issues in MBO workshop is a ‘must know’ for:

Tax and legal professionals undertaking MBO-type advisory work, including those working in M&A, private client, and share scheme roles.

This training is also a ‘nice to know’ for:

Any tax professional working in compliance who wishes to progress their careers into advisory or planning work.

Redcliffe Training's tax issues in MBO workshop look at management buyouts from a holistic perspective, taking into account the interests of all stakeholders. It looks at the transaction from the point of view of corporate and employment tax aspects and takes into account the due diligence requirements of both the vendor and the buyer. It also looks at remuneration planning for the management.

Helpful in the early conversations with clients who are considering MBOs and will be extremerly helpful when we get to structuring a transaction and thinking about tax issues.
I work within employment taxes and so often deal with parts of transactions so it was helpful to get an overview of the transaction as a whole and the sections on SSE and structuring were particularly interesting.

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(min. 50 participants)