Implementing a group business structure allows you to consolidate numerous entities under one ‘holding group’.
There are many reasons for structuring your business in this way but first and foremost it allows you to grow your business through acquisitions with relative ease.
Additionally, it protects your business assets whilst containing any contingent liabilities – this is a great way of protecting your business from unexpected and possibly illegitimate bills and claims.
Big corporations have been doing this for years and the only reason SMEs tend not to is because they may not have the time, money, or resources to do so – or, they are simply unaware of the need.
Since the Limited Liability Act 1855 was passed, it’s been possible to protect business owners against liabilities or losses in the UK. The House of Lords judgement in the landmark nineteenth century case Salomon v A Salomon & Co Ltd confirmed the effectiveness of this concept. This concept now extends to partnerships which are incorporated under the Limited Liability Partnerships Act 2000.
How does it work?
Group structuring involves setting up multiple entities that all sit under one ‘holding company’. The holding company doesn’t need to produce goods or offer services but owns shares of the other companies to form what’s known as a ‘corporate group’.
Creating a corporate group allows you to grow your business easily through acquisitions because, with a group structure in place, you can integrate newly-acquired businesses into your existing corporate structure with minimal headaches.
Additionally, any of your businesses can fund any other business that also falls within the corporate structure or you can use the proceeds from the sale of one business to fund the acquisition of another.
Separating your business assets and liabilities is a great way of protecting your company from unforeseen bills or even winding up orders. As many business owners will know, when a winding up order is issued, all assets attributed to the company in question will be sold off by liquidators and the business will cease to operate.
By holding all your assets in a different entity, you protect your assets (and essentially your business) from being impacted.
We can help you:
- Set up separate legal entities for different business functions to isolate liabilities from assets
- Establish arm’s length commercial arrangements between the different entities to reflect their respective functions
- Ensure the business can continue in the case that one or more of its constituent entities is threatened with insolvency
- Ensure that all steps necessary to construct a robust structure are carried out properly so they cannot later be undermined
- Minimise the requirements for personal guarantees or advance deposits and ensure that the impact of charges on assets is minimised
- Protect business premises from unwarranted interference from debt enforcement agencies
BOTTOM LINE: We hate to see businesses being bullied and want to change things for the better.