Structuring for success
As we move into the second half of the financial year, it is a good time for business owners and directors to revisit old business and asset structures and to consider if a restructure may be beneficial.
There are many reasons why business and asset structures may become outdated and in need of restructuring including:
- changes in a businesses’ operations (e.g. national and international expansion);
- changes in market dynamics or competitor behaviour;
- the business experiencing significant growth and/or assets values having increased substantially, in particular, the value of intellectual property assets;
- changes in the personal situation of business owners, including the need for asset protection to be considered;
- changes in legislation / regulatory environment (e.g. changes in tax law); and
- the need to introduce new investors into the business.
In addition to the above, it is common for initial business / asset structures to be established with a focus on minimising upfront costs. This may result in less-than optimal structures being established from a cash flow, tax and business sale perspective.
While restructuring a business and/or assets may incur some costs, significant benefits may be available, including improved asset protection, providing greater financial benefits on an eventual sale and tax minimisation. It is not uncommon for the benefits arising from a restructuring to result in the payback period on restructuring costs to be as little as two (2) to four (4) years.
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