Unlock hidden value in your business with a carefully considered demerger
Our team of corporate solicitors can help your business by:
- Understanding whether a demerger is right for your business for example, if your activities are diverse and you feel that, by splitting up the business, each part can focus on its core activities, with separate balance sheets and revenue goals.
- Showing you how a demerger can be structured to drive out the most value and/or achieve your goals for the demerger.
- Advising you on the sale of part of your business if you want to fend off potentially hostile offers for your business and divest yourself of some of your assets.
- Explaining the demerger options that are open to you and the tax consequences of each type.
- Obtaining HMRC clearance for the demerger if applicable.
- Liaising with shareholders and investors during the demerger and showing them the benefits of the deal.
- Reviewing your company’s legal documents and management structure as well as your shareholdings and providing legal advice as to how it will change as a result of the demerger. For example, there may be considerations in relation to pension and employee share schemes or intellectual property.
- Drafting the necessary documents including the demerger agreement itself as well as shareholder resolutions, making sure everyone’s interests are protected as far as possible and balancing the risks and rewards.
- Registering your new business at Companies House.
What our clients say
We pride ourselves on delivering an excellent service for clients, but don’t just take our word for it.
Our solicitor managed to balance a tricky restructuring with lots of moving parts to create a simple solution that has passed muster with our stakeholders!
Over the years Harper James have helped us navigate complex legal issues and red tape, providing distilled options and legal consultancy that far exceeds the service levels we’ve previously experienced from more traditional law firms. The team act like our own in-house counsel so, regardless of which lawyer we work with, we feel supported and that they truly have our best interests at heart.
We use Harper James because they understand the venture capital sector we operate in, know our business inside out and are always on hand to assist us in any way we need.
As a University spin-out getting the right team of lawyers to support our emerging business was fundamental and the team are always available to provide us with the invaluable guidance and support we require.
My colleagues and I have found them to be adept at dealing with the variety of challenges facing early stage companies. They are a trusted source for sound, sensible advice and practical deal management.
Quite frankly I was stunned at the low cost of the service given the value it provided us.
For us, the support of Harper James Solicitors has been a gift. The collaboration we have had has been of tremendous importance. The service has been superb value for money.
Our scale of growth would not have happened without the support of Harper James.
Smooth the way to greater shareholder returns with holistic legal support
We’ll work with you and your management team to answer detailed questions about your particular company and business dynamics, so together we can troubleshoot potential issues that could occur and that are particular to your situation, for example:
- Do you have assets like intellectual property or software that is used by the business as a whole, and that could be affected if the group were to be split up? How will these be handled, and will you ask for payment or license fees for use of IPR?
- What will happen to goodwill?
- Will your existing suppliers be prepared to deal with the new business? Will any consents be required, for example from landlords?
- How about business loans and other liabilities? Will these be transferred?
- Do you have distributable reserves available?
- What will happen to employees when the company splits?
Types of demerger to consider
A statutory demerger is where you create a new company from part of your existing business to acquire the ‘demerged’ business and assets, and its shares are transferred to the original company’s owners. The transfer is either by way of a dividend or by creating a new subsidiary and moving this to a new holding company, with the shares being transferred to the original shareholders.
Reduction of capital demerger
You can also demerge by reducing the share capital of the parent company and transferring a trading business to new shareholders or new holding companies as a repayment of capital.
In a liquidation demerger, you can begin the process of liquidating your business and transfer assets to new companies. Shares in the new companies are given to original shareholders as a result of the liquidation of the old company.
What type of demerger you choose to implement depends on your company’s financial situation, tax issues, the factual and legal background to the deal, and the reasons you want to split off part of your business. We’ll help you navigate the choices available to you and come to a conclusion as to the best route for your business.
How a demerger will benefit your business
Increase in shareholder value
Often, when a business splits off part of its activities into a second company, shareholders will be given shares in the new company. These two sets of shares are often worth more in total than the shares of the original company, in effect unlocking more value, and each individual business after the demerger will have a clearer market profile.
Drive out value and make your businesses more efficient
Where your business affairs have become overly complex, with different parts of your activities cross-subsidising others, splitting them out can make each part function more efficiently as a stand-alone entity, potentially with more access to loans and capital.
Streamline your management team and focus on specialist areas
Management can focus more keenly on specialist areas and manage the individual aspects of the business more productively.
Who we help: Large and small companies, groups, holding companies, directors, investors, and shareholders
We support a wide range of UK-based companies at various stages in their business development. If you feel that splitting off part of your business would help you realise additional value for shareholders, or you want to demerge in order to focus management attention on particular aspects of your activities, get in touch. It’s vital to take good legal advice at the appropriate stage of a demerger to avoid unexpected tax charges and ensure the demerger is carried out as quickly and efficiently as possible.
Why choose Harper James Solicitors?
We can assist you with strategic analysis of your company and its structure and support you to demerge your activities. Our corporate solicitors have a wealth of experience in demergers and restructuring organisations. We are experienced in identifying your immediate needs and proactively working with you to troubleshoot potential issues, so the transaction is carried out as smoothly as possible.
Plus, we have all been recruited from top 100 UK law firms or from large international businesses and have advised clients both as external advisors and as in-house corporate counsel. Find out more about the team here:
Abby Watson is a corporate solicitor, specialising in private equity investments, mergers & acquisitions, EMI share schemes, corporate finance and governance and more.View profile
Adam Kudryl is a Partner and Corporate & Commercial Solicitor at Harper James Solicitors, specialising in strategic investments, acquisitions and sales.View profile
Jas is a corporate partner at Harper James Solicitors, advising on corporate governance, mergers & acquisitions, venture capital & investments.View profile
Stephen is an experienced corporate lawyer, with a career including time at DLA Piper and Pinsent Masons. He specialises in mergers and acquisitions and private equity work.View profile
Shubhu specialises in early-stage fund raisings, shareholder arrangements and M&A. Prior to joining Harper James she worked at Mills & Reeve and before that at Addleshaw Goddard and Slaughter and May.View profile
Our three transparent pricing packages are designed to give you the widest possible access to high-quality legal advice, whatever the size and nature of your business:
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Have legal peace of mind for £189 per month with additional support from £99 per hour.
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For businesses requiring 60+ hours of support a year, with prices equivalent to £99 per hour.
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