pre-exit planning for entrepreneurs in the uk - barclays · 2 pre-xpitxpil aen iexgpipf n ie 2...

Wealth and Investment Management

Pre-exit planning for entrepreneurs in the UKWhite paper


2� Pre-exit�planning�for�entrepreneurs�in�the�UK� January�2015

I�want�to�get�the�best�deal�possible�for�my�business;��what�factors�might�I�consider?

Page 12

Entrepreneurs�tend�to�be�time�poor,�so�if�you�want�to�go�directly�to�a�particular�area�–�perhaps�one�of�the�following�questions�applies�to�you...

People�financially�depend�on�me,�how�do�I�make�sure�my�family�are�secure�while�I�create�wealth? Pages 19 to 24

How�do�I�go�about�sourcing��the�advice�I�need?

Pages 9 and 28

What�if�something�happens��to�my�business�partner�before�we�sell?� 0

I�don’t�know�how�much�is�enough…�how�do�I�estimate�the�amount�that�secures�my�future?�

Page 30I�like�to�‘begin�at�the�end’,�so�just�tell�me�what�actions�might�I�consider?�

Page 35

I�wonder�about�how�my�staff�fits�into�all�this,�what�issues�might�I�start�thinking�about?�

Page 15


Pre-exit�planning�for�entrepreneurs�in�the�UK� January�2015� 3

ContentsIntroduction �� 4

Sketching out a map to navigate unfamiliar waters �� 5

Not letting prevailing winds determine the course �� 5

The entrepreneur’s journey�� 6

Where does pre-exit planning fit in? �� 6

Your business ��7

Your corporate advisory team�� 7

Maximising sales proceeds �� 10

Staff – your ‘other family’ �� 13

Entrepreneurs’ Relief �� 15

Your family �� 17

Know thyself �� 17

Equity in the business �� 17

How much does insurance cost? �� 19

Jargon debunked… Protection policies ��20

Pensions, property and the blurred line ��22

You ��23

Establishing your ‘wealth philosophy’ ��23

Your personal advisory team ��26

What’s your Lifestyle Number? ��28

Using the crow’s nest ��30

A timeline to help you manage the 36 months before an exit ��30

Concluding remarks ��31

Next steps ��33

A checklist to help when you evaluate how best to proceed ��33



IntroductionSince James Barclay became a partner in a goldsmith business in 1736, and particularly in the current age of digitalisation and globalisation, we have seen entrepreneurial journeys become faster, and more complex� Each entrepreneurial journey is of course unique, but we believe there is a great deal of commonality in terms of what does and doesn’t work, in the critical ‘pre-exit’ period before a business is sold�

This white paper has been written to help entrepreneurs learn from the experiences of others that have gone before them� The objective? To maximise the reward, both financial and personal, for their ingenuity, bravery and years of hard work�

Please note that this document does not constitute tax advice and any rules and tax allowances referred to within could be subject to change� The effects and benefits of a particular tax treatment will be dependent on your individual circumstances and we recommend that you seek independent advice�



Sketching out a map to navigate unfamiliar waters

Whilst each entrepreneurial journey is unique, there are certain characteristics that entrepreneurs share� Chief among them are vision and hard work, alongside courage in the face of risky, but potentially rewarding business opportunities� If the timing is right, their visionary idea can become not just a successful business, but also culminate in a life-changing financial windfall�

It is undoubtedly a fulfilling journey, whether it’s a once in a lifetime deal or one of several deals for a ‘serial entrepreneur’� Most entrepreneurs envision the business goal for which they relentlessly strive better than they can articulate what they want the resulting wealth to ‘do’ for them�

An understanding of what money means to them, their personal ‘wealth philosophy’, is key to successfully navigating their way to financial freedom� Articulating that philosophy begins with identifying what they are personally hoping to achieve, gaining an awareness of the opportunities to deploy the wealth to that end and understanding the dangers, in the meantime, in overlooking something important before the business is sold�

These individuals need trusted and intelligent counsel; that is to say the tools to help them sketch out a map to navigate these unfamiliar waters, so it is what money means to them and their family, not the vagaries of fate, which determines their destination�

Not letting prevailing winds determine the course Those who have sold a successful business don’t tend to suffer from a shortage of friends� Not only long forgotten school friends, or distant relatives, ready to share in their financial success, but also professional advisers and wealth managers like us, who are in business to help them preserve their wealth and deploy it in line with their financial goals� Unfortunately, while considered and wide ranging advice ‘post-exit’ is important, ‘pre-exit’ it is arguably even more so (and more rarely received�)

If you are an entrepreneur, the decisions you make – or ignore/are not aware of – before the sale, can have a significant impact on your post-sale choices� This white paper helps you address this potential gap, by assisting you in identifying where you want to head and giving you the tools to map your preferred course� Reading it will give you an awareness of all the key questions you should consider and encourages you to approach it by giving particular focus to three areas: Your business, Your family and You (reflected in the three main sections of this paper�)

At Barclays, we are well positioned to assist you in achieving your goals and we will seek to do so in the right way – via thoughtful, and responsive guidance, tailored to your unique needs� Should you choose to work with us ahead of your business sale, we look forward to exploring with you your personal philosophy regarding money, and helping you charter the course to achieving all of your personal financial ambitions�



The duration of the journey of course varies from one

business to another, but 20 years or more, common to ‘old world’ businesses, has

tended to be reduced for many ‘new world’ businesses

such as those in the technology or media sectors.

Nevertheless, even in those sectors, around 7 years from

inception to sale is still the minimum in most cases1.

The entrepreneur’s journey The entrepreneur’s journey can be thought of as moving from a human asset (an idea) to a financial asset (wealth), with four inflection points along the way: Start-up, Growth, Pre-exit and Post-exit (see Figure 1)� It’s important to acknowledge that as one journey ends, another may begin� While some walk away to engage in personal passions or philanthropic pursuits, many view the sale as a platform for investing in another business, bringing them back to the beginning of the cycle�

Where does pre-exit planning fit in?Each of the four phases of the cycle will generate unique challenges� During Start up, for example, there may be a need for advice on funding, protecting dependants, networking or which lawyers and accountants can help with the structuring of the business� At Barclays we have specific solutions and strategic partners to respond to the needs prevalent at each phase, and can work alongside a business owner’s other advisers to provide comprehensive support�

Either side of a business sale, Barclays Wealth and Investment Management specialises in helping entrepreneurs shape their personal financial plan� This may involve replacing income lost upon sale, putting in place a financial ‘lifeboat’ that underpins future plans, assisting entrepreneurs in pursuit of new ventures or helping them define their desired legacy�

Figure 1 – The entrepreneur journey

Post-exit

Pre-exit

Growth


Investment BankCorporate Bank

Retail and Premier Bank

Business Bank

Barclaycard

Start Up

1�Bruce�MacFarlane,�co-founder,�MMC�Ventures



Whilst this section focuses on the corporate advisory team, the personal advisory team is equally

important and is discussed in detail on page 28. The direction

the personal team pulls in will tend to be driven more by the

entrepreneur’s personal financial goals and philosophy, and will tend to focus on the post-sale future. They will need to work

alongside other advisers during Start-up, Growth and Pre-exit, and

as the sale draws closer, it’s wise to draw closer to the personal team; as during Post-exit they

should take the initiative.

Your businessIn the first of the three main sections of this paper, we look at getting all aspects of the business in the right shape for sale� Such preparation will not only address factors that can have an impact on the net sale value, but also how to ensure things progress as smoothly as possible during the period leading up to the completion of the deal�

Sensible planning does not rule out surprises, of course, and you should be ready to ‘pitch and roll’ as issues arise� Nevertheless, giving some thought to the advisory team, ‘dressing the business for sale’, communicating with staff and securing important tax reliefs, will make the achievement of your desired post-sale outcome far more likely�

Your corporate advisory team

“It is all about trust. You build that trust by understanding what is important to me and demonstrating you understand. The key is

education, don’t throw ideas at me. Educate me, but as equals.”

James Spinella, co-founder of IDS (sold to Agilysis in 2007 for USD190m)

The one thing all entrepreneurs have in common is how busy they are� As such, timely and targeted advice is particularly important to them, and never more so that in the lead up to selling a business� A sensible starting point is to take a few moments to consider the shape of the advisory team, focusing on the lead-up to the deal and how each adviser might contribute to making it a success�

Effective teams often need someone co-ordinating and leading� Whilst some business owners feel that it is their role, our experience suggests it is better to identify (even if it just in one’s own mind) someone in the advisory team to fulfil that requirement� It may be the accountant, private banker, lawyer or financial planner; what matters is their ability to create a collaborative ethos, which encourages different advisers in the team to politely challenge each other, while nevertheless acting like a proficient crew - pulling in the same direction (a direction dictated by the desired shape of the exit�)

In Figure 3 we summarise different types of advisers that might form part of the Corporate and Personal advisory teams� It covers what they do, how they might be engaged and different specialists within each type� A sensible approach might be to meet at least three people for each seat before selecting one to engage, but referrals from existing trusted advisers or other business owners may help shortcut that process� In selecting advisers, size matters� It’s only a generalisation, but investment banks and very large professional services firms tend to set up for working with large (generally quoted) businesses�

“The earlier the better!” tends to be the refrain when asking professional advisers “When should I start getting advice on a potential sale?” but during the Start-up and Growth phases, it might be difficult to know which firm or individual will be a good fit for you and your business� It’s also common for businesses, and a business owner’s wealth,



to grow to an extent that different expertise is required� If this applies to you, you might consider changing advisers as you approach the sale, or Post-exit� If it’s proving a difficult decision, a compromise may be a new adviser providing specialist advice either side of the exit, with the long standing adviser retained, to continue with more ‘day-to-day’ issues�

Although there are a number of different types of adviser identified in Figure 2, some will only be engaged to do a specific ‘job’ relating to the sale and others can be ‘grouped’ into mini-teams� For example, at Barclays we can fill the private banker, business banker, chartered financial planner and investment manager seats� As such, if a client works with us and a law firm and an accountancy practice, they think of themselves as having three advisers – generally a very manageable size of team�

Figure 2 – Building your Personal and Corporate advisory teams

Private Banker/Investment Manager Private client lawyer

Chartered Financial Planner Accountant/Tax adviser

Business banker Corporate lawyer/Corporate Financier

Corporate financial planner Business accountant/Tax adviser

Entrepreneur as individual

Entrepreneur as business owner

Private Banker/Investment Manager Private client lawyer

Chartered Financial Planner Accountant/Tax adviser

Business banker Corporate lawyer/Corporate Financier

Corporate financial planner Business accountant/Tax adviser

Entrepreneur as individual

Entrepreneur as business owner

Wealth�and�Investment�Management


Figure 3 – Your Corporate Advisory team

Corporate�financier�

Their principal role is to find the right buyer and help you negotiate the deal� It’s common for the corporate financier to be engaged to help with the sale specifically, rather than long-term�

There are typically three types of adviser who can fill this seat: investment bankers, partners of private equity/corporate finance ‘boutiques’ or specialists attached to a wider professional services firm (usually accountancy partnerships)�

Unless the business sale is likely to exceed £100m, investment banks tend to be a poor fit� Nevertheless, as with any of the seats on the advisory team, the key factor is finding a person who ‘gets’ you and what you’re trying to achieve, and who spends their days advising people with situations similar to yours� Another consideration might be the need for sector specific knowledge�

It is prudent to engage a corporate financier not much later than 24 months before a sale, as the best ones add as much value helping to get the business in the right shape for sale, as they do in identifying buyers or guiding the seller at the negotiation table�

Corporate�lawyer�

The main role of the lawyer is providing legal due diligence (DD) on the company and the deal� The SPA (Sale and Purchase Agreement), including ‘reasonable’ restricted covenants, the tax deed (historical liabilities normally stay with the vendor), disclosure letter and settlement agreements all sit with this adviser�

DD may be paid for by the potential buyer, once discussions have proceeded to an advanced stage, but it is also worth considering before the buyers are engaged� Once negotiations begin in earnest, the lawyer can ensure you have a clear understanding of the deal and that the small print, pertaining to areas such as earn-outs or post-sale liabilities, doesn’t lead to the post-sale situation unravelling�

The most important thing to consider in working with a corporate lawyer is size� Sector specialisation may also be relevant to your business� The corporate legal adviser may be one of the late(r) comers to the advisory team, but it is a mistake to engage them too late� Typically, we have seen 12-18 months before the sale work well�

Business�accountant�or�tax�adviser�

An old cliché, “It’s not what you make, it’s what you keep” perhaps explains why this adviser tends to be an entrepreneur’s ‘best friend’, and the team member most likely to lead the discussions�

Those that specialise in advising entrepreneurs and business owners often have a good working knowledge of personal taxation too and, with technical support from colleagues, can work with you from Start-up, through Growth, to Pre-exit and beyond� As well as tax reporting, the best tax advisers will be proactive in helping you organise your affairs, maintain a good working knowledge of your business and act as a sounding board for long term aspirations�

They should provide a perspective that transcends any divide, imagined or real, between your personal position and business affairs�

Corporate�financial�planner�

Sometimes called “employee benefits consultants”, the role of this member of the team is two-fold: advising on pensions and other group benefits for staff and helping with executive benefits, such as Key Person Insurance, shareholder protection and Relevant Life (see ‘Your family’ below)�

Large consultancies, have considerable depth of expertise, but many entrepreneurs and small business owners find an IFA firm that specialises in this area, or someone attached to a broader professional service practice or corporate banking division, is a better fit� This is because a wider understanding of the issues owner-managed businesses face is important to getting this advice right�

Corporate�or�business�banker�

A corporate or business banker can help entrepreneurs through Start-up and Growth� Some clients prefer to have a different bank for personal and business, because they fear ‘cross contamination’ of relationship and ability to get credit� Others feel a ‘joined up’ approach works better, a view we would generally agree with�



Perspective is a strange thing when you’re ‘too close’ to

something. Paul McGee, an executive coach, uses the

example of a beach ball. You ‘know’ the segments of the

beach ball are red, yellow and green - while the person on the other side ‘knows’ they are blue, white and orange.

Of course, you’re both ‘right’, it’s just a difference in

perspective.

You may wish to take a look at a potential buyer, before

entrusting the results of your vision and hard work, not to

mention the future of your employees to them. One

approach is ask your advisers to take a look at Companies House records and/or speak to someone who knows the sector. Some advisers now

also use a service like www.duedil.com.

Maximising sales proceedsEntrepreneurs are often so focused on making their business a success that any ideas not directly related to this goal are put on the backburner� Our Behavioural Finance team talks about someone in this situation being in a psychological ‘tunnel’�

If this psychological ‘tunnelling’ resonates with you, bear in mind that it may lead to important issues being missed, especially if the advisory team is unable to ‘break in’ to bring them to your attention� Counter-intuitively, there may also be important issues that are too close to get noticed� One of the objectives of this paper is to counter the danger of any of these key areas failing to receive the attention they need�

Pre-sale�due�diligence

Business owners know their business better than anyone else� Nevertheless, ahead of a sale negotiation, a wider perspective may be required� The fewer concerns that arise with the accounts, record keeping, contracts or business structure, the less likely that offer will be reduced, made more dependant on ongoing results or fall apart all together�

Carrying out some internal (or perhaps better still, external) due diligence (DD) provides the entrepreneur with an opportunity to see what someone else sees when they look at the business� DD might focus on legal, financial and commercial aspects of the business and for some industries, specialist areas such as patents�

The rationale is similar to the seller of a house asking a brave friend to come and poke around their house before it’s put on the market� With a fresh set of eyes, they are likely to point out all the little idiosyncrasies that the owner has stopped noticing, but which could put off a potential buyer�

An adviser taking a high level look at Entrepreneurs’ Relief, trading status and so forth could cost around £3,000 to £5,000� An exercise that mirrors a buyer’s DD, with a view to identifying all the ‘skeletons’, as well as health checking all main taxes and legal issues such as contracts, might cost £10,000 to £30,000, depending on the size and complexity of the business� If you are targeting a multi-million pound sale, this could be money well spent�

If the buyer is known, business owners sometimes share the cost of DD with them, with a view to it both covering the buyer’s DD requirements if the sale proceeds, and making the business saleable to others if it doesn’t, of course some might see a ‘conflict of interest’ issue here� This tends to involve an in-depth process with a ‘big six’ accountancy firm (for it to carry credibility with the buyer and, if required, alternative buyers) and the fees tend to get into six figures�



Crowdfunding is an increasingly popular approach to funding ventures, and can work well, but as with all elements during Start-up, it’s worth thinking about the implications at sale – in this example, your shareholder register may discourage potential buyers if it ends up with more names than the waiting list for MCC membership at Lord’s.

The British Library Business & IP Centre has a lot to offer any entrepreneur with an annual turnover over £100,000, particularly in Start-up and Growth phases, but as well as substantial research resources, particularly relating to patents and trademarks, the service also provides assistance with planning, networking and knowledge sharing, relevant to the industry in which the business operate.

Dressing�your�business�for�sale

Taking time to consider who owns the business, and what the business itself actually owns, is a good start in terms of ‘dressing your business for sale’, but there is much more to it than this� Below are some of the questions you might ask yourself, or discuss with your advisers:

Concentration – Does the business carry concentration risk in terms of customers, suppliers, products or management? Is there time to do much about it? Will some buyers be less worried than others�

Intellectual property – Is it a significant part of the value a buyer might assign to the business? Does the business control it? Are all patents and trademarks registered in the UK and internationally?

The premises and ‘non-trading’ assets – Are investment properties or other non-trading assets owned by the business? Are business premises owned by the business or the owner’s pension? If a buyer has been identified, do they see owning the premises as a positive or negative? Are there other tenants to consider? Do any non-trading assets affect Entrepreneurs’ Relief?

Corporate taxes – At a time when there could be a ‘multiplier’ on profits, is the company claiming all reliefs (e�g� R&D)? The business that approaches a sale with no tax ‘skeletons’ in its closet is a rare beast, is remediation needed on payroll, VAT or other areas?

Shareholders – Even if the buyer is comfortable with what the company owns, are they comfortable with who owns the company? Are there any minority shareholders who could prove challenging to include in a sale negotiation? Is some pre-sale ‘tidying up’ viable/worth considering?

Liabilities – Are liabilities a potential issue, given buyers hate uncertainty? Are there contingent liabilities, including any outstanding legal disputes, that could be closed out or at least quantified?

Structure – Is the company structure complicated? Could it be simplified, pre-sale, fairly straightforwardly and without creating any significant tax issues?

Cash – Are there high levels of cash in the business that may look strange to a buyer? Does ‘paying out’ or ‘loaning up’ (within a group structure) have tax implications? Are pensions a potential solution?

Contracts – Are significant contracts coming up for renewal? Is it possible to ‘lock down’ all of the major contracts so that the buyer will feel confident in future revenues during commercial DD?

At Barclays, we do not give tax or legal advice and it is also important to note that the value of various tax planning options will depend on the unique circumstances of the business or individual� If you would like to consider any of the areas touched on in this paper further, please refer to your tax or legal adviser�



The�structure�of�the�deal

Before engaging a potential buyer, or sketching out the preferred deal structure, it is worth thinking about motivation� Something as simple as writing down the five main reasons for selling/not selling, and then likewise considering what is driving a potential buyer, can help focus the mind on what the ‘deal breakers’ might be on either side, and help the team negotiate more effectively�

Desired value is also worth considering before addressing the structure of the deal� Most entrepreneurs have thought about the value of the business, by the time they enter the Pre-exit phase� It is worth bearing in mind, however, that focusing too much on that figure, rather weighing up all pros and cons of a potential deal (including its shape), could cause the importance of some factors to be ignored or underestimated�

An effective way to put things into perspective might be to establish your personal ‘Lifestyle Number’; the amount of capital you need to underpin your lifestyle needs (see the ‘You’ section from page 25 for an exploration of this)� This figure can then be considered, alongside the market value and how flexible you are prepared to be on the timings/shape of the deal, before entering into negotiations� Some of the key questions you might discuss with the advisory team at that stage are as follows:

• To what extent is ‘jam today’ preferable to ‘jam tomorrow’? What if delaying receipt of a small or even large part of the proceeds means a more generous overall buy-out price?

• Is a clean exit or an ‘earn-out’ the preferred option? Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) tends to drive both overall valuations and earn-outs�

• Is continued exposure to the company via loan notes acceptable? Is the coupon (typically 8-12%) fair compensation for the credit risk?

• Is a continued exposure to the business, in the form of ‘sweet equity’, desirable?

• What to include in the Heads of Terms document? (As much as it tends not to be binding, it sets the direction of travel and radically moving away from it later in the process can be difficult�)

Who�do�I�sell�to?�If�you’ve�not�been�involved�in�a�business�sale�before,�it’s�worth�considering�for�a�moment�the�different�types�of�buyer�you�might�market�your�business�to:

• Private Equity/Venture Capital (PE/VC – still the dominant method of entrepreneurs exiting UK businesses)

• Trade sale (tends to lead to a capped earn-out)

• ‘Angel’ or ‘Super Angel’ networks and individuals (tend to take a long term view)

• Stock market float/‘IPO’ (AIM appears to be ‘back in business’ after a slow couple of years, or the business may be big enough to consider a listing on the FTSE All Share Index)

• MBO (Management Buy-Out), MBI (Management Buy-In) or a BIMBO (combination of Buy In and MBO, often with a bank or private equity helping to finance the deal�)

• Family offices/Multi family offices (the larger ones operate in a similar way to private equity houses)



If business owners fail to address these areas pre-sale, one scenario that can occur is the entrepreneur ‘paying out’ from net proceeds one or more staff members, to whom promises have been made. Clearly, this is not very appealing, but by leaving it all the last minute, some have no choice. With a bit of pre-exit planning, there is normally a more sensible approach; many find that a share incentive plan offers a solution.

A word of caution about deferred consideration; this can take many forms, from the insecure ‘performance target’ related deal to reasonably secure loan stock, with various shades in between (including loan notes with conditions or bad leaver clauses attached to them, which can be viewed by some as effectively worthless)� The advisory team can check the terms carefully and offer you an informed view�

Clearly, there are two sides to any negotiation and the buyer will also have figures, timings and possibly a deal shape in mind too� The reality is the final size and structure of the deal is likely to be shaped by the buyer if they want the business less than the owner wants to sell it� When the reverse is true, for instance when the buyer views the purchase as a strategic imperative, the vendor should be able to dictate terms (within reason)�

Regardless of who wants it more, if issues arise during the negotiation or DD process, one generally finds that PE/VC buyers negotiate the price down, or shift value from initial cash to an earn-out based on performance, while buyers or Angels are more likely to walk away�

Staff – your ‘other family’

“Entrepreneurship is about a killer team, not a killer app.”

Peter Hiscox, Senior Lecturer, Judge Business School

Often, being an entrepreneur is a solo pursuit, or involves only one or two trusted business partners, in another sense owner-managed enterprises often have a ‘family feel’ to them, even when no family members are involved� As such, concerns about what the sale might mean for staff, and in particular the long standing members of staff, is sometimes a key part of an entrepreneur’s thinking during the pre-sale phase�

You may feel there is an even smaller group of people who you view as trusted lieutenants� This group might play a big part in your pre-sale thought process and you may find it helpful to think about the pre-sale period in terms of how it might affect your (for want of better words) trusted lieutenants, core staff and other staff members�

This can provide a platform for considering, and discussing with the advisory team, the potential staff related issues and tasks, before the deal is upon you� It should also flush out what promises, if any, have been made to staff, explicitly or implicitly� The aim of any such exercise is to treat staff fairly, without losing sight of your other priorities as an

owner of the business�

Promises�to�reward�staff�and�considering�the�post-sale�reality

The initial focus regarding staff may be what was promised to whom, when and so on� Following that, thoughts might turn to the most likely post-sale scenarios and the likely impact on the different groups mentioned above (i�e� core staff, trusted lieutenants and other staff members)� If you haven’t assessed the main issues that could affect each group once the deal is done, it could make weighing up such competing factors and planning for the earn-out period difficult�

Some business owners, for example, lean towards an MBO (Management Buy-Out) because they like the exciting opportunities it offers for trusted lieutenants, but that path could mean accepting a period of consolidation that is less appealing to the other two groups� Others view future growth and avoiding redundancies as the priorities, however, so a large overseas buyer looking to build a presence in the UK might be preferred� While this might benefit other staff members, it could of course involve a change of culture that could be deeply felt by core staff and trusted lieutenants.



It can sometimes prove possible to establish an Enterprise Management Incentive (EMI) scheme only 12 months out from an exit, to meet promises to key members of staff. It may prove a far more efficient alternative to the entrepreneur writing a cheque to those members of staff from his or her net proceeds.

Protecting�against�misunderstandings�pre�and�post-sale

In a case study on page 18, we look at the instance of an entrepreneur who aborted a previous attempt to sell his business because a ‘procession of suits’ led to a concerned member of staff leaking the possibility of a sale to colleagues� Three years out from the target sale date (it’s always worth having one, even though it will almost certainly move), the communications strategy is fairly straightforward: nobody needs to know that sale is being considered�

When 36 months out from a sale, discussing the potential sale with other significant shareholders, and briefing one or two key members of the advisory teams, should be the focus� Around 18-24 months before the sale, other shareholders and the further members of the advisory teams might be brought ‘into the tent’� Some of the key questions to be considered are as follows:

• At what point during the 6-36 months pre-sale do I plan to inform each person who eventually needs to know?

• Should the main shareholders or all shareholders be taken into confidence in the initial stages? If all shareholders are informed, should the key members of staff also know, with communications to the rest of employees planned further down the line?

• If the potential buyer has been identified, does its owner or management team have a view? Who knows at their end, and how significant is the potential for leaks getting back to staff within the entrepreneur’s company?

• Is the nature of the business and the buyer (if known) such that they are likely to be ‘spooked’ if the possibility of a deal becomes public knowledge?

• If a trade sale is likely, and the expected buyer is a competitor, has the management

team spent the last few years describing them unfavourably in conversations with staff?

Share�incentive�schemes

If there is a share incentive scheme in place, it is important to consider the impact of the deal� Is the buyer willing/able to continue with the scheme? Depending on how many/which staff members will be impacted, this might be one of the factors that can be taken into consideration when looking at different ways to structure the exit�

Sometimes the business has raised finance previously and the amount of capital loaned by investors, including the business owner themselves, may be close to/higher than the current business value� If so, an equity stake in the business is ‘worthless’ in a sale, and key staff may not be motivated to drive a sale that only benefits others� One way to align management incentives with investors in such circumstances is to use an incentive plan linked to specific criteria that mirror the owner’s objectives� Such incentives can also be

structured as ‘exit only’�



Entrepreneurs’ ReliefThere’s a general, perhaps understandable, perception that tax rates have gone up over the past ten years or so, but for entrepreneurs the burden has generally lightened� Corporation tax rates have fallen (from 6th April 2015 they will start at 20%) and the individual limit for Entrepreneurs’ Relief (ER) has gone from £1m (when it was first introduced on 6 April 2008) to £2m then £5m and is currently £10m�

Unfortunately, many entrepreneurs don’t take full advantage of ER, either because they fall foul of one of the qualifying criteria, or because they aren’t aware of their options to ‘broaden’ qualification across members of their family who work in the business�

The underlying principle of ER is that those that invest their blood, sweat and tears (and in most cases money) creating wealth and jobs should pay a lower rate (10%) of Capital Gains Tax (CGT) than those investing in more ‘passive’ ways (up to 28%)� The main qualifying criteria are as follows:

• The individual must have some of their £10m lifetime allowance available

• They must own at least 5% of both ordinary and voting shares (ER can also apply to other structures such as partnerships)

• They are an employee or ‘officer’ of the business

• The equity must have been in their ownership for at least 12 months

• The business must be a trading business

There are a number of subtleties in addition to these high level principles� Deferred consideration, for example, does not always receive ER� The general rule is that if you pay tax upfront on deferred consideration you’ll get ER, if you choose to defer the tax payment you often won’t get ER (but you only pay tax when you receive the funds)� Clearly this is only a general rule and it’s an important area to explore with the tax adviser on the advisory team�

ER questions to ask yourself/your advisory team1.� �Is�the�business�definitely�a�trading�business?�Are�cash�reserves�justifiable�as�

accumulated�profits�and/or�working�capital?�Do�we�have�other�assets,�such�as�properties�or�investments�that�could�be�problematic?�Should�the�setting�up�of�a�‘New�Co.’�be�considered,�to�‘clean�up’�the�trading�business?

2.� �Do�I�own�5%�of�the�ordinary�and�voting�share�capital?�Has�there�been�any�restructuring�of�the�share�ownership�that�might�have�impacted�ER?�Could�the�breakdown�of�share�ownership�change�as�a�result�of�share�incentive�plans�‘maturing’?

3.� �Will�I/we�have�owned�the�equity�for�12�months�at�the�point�of�sale?�If�I/we�fail�one�of�the�criteria,�can�that�still�be�addressed�or�is�it�too�late?�Are�there�legitimate�ways�to�defer�the�‘trigger’�to�allow�us�more�time?�Are�we�selling�less�than�75%�of�the�business?�(HMRC�may�require�a�commercial�rationale)

4.� �Is�there�a�trust�or�other�vehicle�involved�in�the�ownership�of�the�business?�Do�I�wish�to�put�any�of�the�shares�into�a�trust�or�other�vehicle,�pre-sale?�Do�I�wish�to�gift�any�of�the�shares�to�loved�ones,�pre-sale?�Can�I�get�family�members�into�a�position�where�they�will�also�qualify�for�ER?

5.� �Will�I�get�ER�on�the�deferred�proceeds?�Will�going�for�ER�mean�paying�CGT�on�deferred�proceeds?�If�the�business�fails,�will�I�get�my�CGT�on�the�loan�notes�back,�or�just�a�capital�loss�to�carry�forward?


16� Pre-exit�planning�for�entrepreneurs�in�the�UK� January�2015�

Case study – one entrepreneur’s story

Second time luckyWe engaged an entrepreneur who was considering the sale of their business� There were already a couple of seriously interested parties and after aborting an attempt to sell his business a few years earlier due to pre-sale discussions being leaked to staff, he wanted to explore pre-exit planning with us, as discreetly as possible� This time, as you might imagine, he gave his approach to staff communication a lot of thought�

The goalsHaving touched on his present circumstances and likely timescales for the sale, we explored his post-sale aspirations, which led us to agree three priorities:

• Setting up a new business, with £1m kept in cash for this purpose (plus a further £1m as a ‘rainy day fund’�)

• Building up Inheritance Tax efficient ‘lifeboat’ for his family to draw upon in times of need, either during his/his wife’s lifetime or after their death�

• Constructing an investment portfolio, incorporating his and his wife’s existing pensions, and taking advantage of other tax allowances to underpin the income needed to support their lifestyle for the rest of their life, net of tax, charges and inflation� His ‘Lifestyle Number’ was £5�2m (see ‘You’ section from page 25)�

Looking backWe then turned from the future to the past, and discussed how he had got to this ‘pre-sale’ point� What emerged from that discussion was something of a bombshell for him� A few years ago, he had restructured the share register, to give some share ownership to the management team�

The impact of that reshaping was that neither he nor his wife retained 5% of the voting shares any longer, so did not currently qualify for ER� There were also other issues, though not quite as dramatic, involving minority shareholders, the pension owning some of the business assets and the business owning some assets that our client wished to retain beyond the deal completing (and which buyers were unlikely to want)�

The solution• In addressing the ER problem, it emerged their tax adviser had not been kept in the loop with developments, so was

completely unaware of the issue� We do not give tax advice, so we helped the client re-engage him

• It also emerged that the client’s two children were young adults working in the business; he had not thought about whether they should be given sufficient share ownership to qualify for ER�

• When we explored this option, he felt that if this could be done using a trust, company or partnership, to give an element of control and asset protection, then it was a path he and his wife wished to go down� We explored the options with his tax advisers and found a solution that worked�

• Finally, their wills were not current, so as part of helping him build his advisory team, we introduced him to a several private client lawyers, one of whom he engaged soon after�

The outcome• The first £40m of the sale proceeds, which has since completed, was received at a 10% tax rate rather than 28%, saving

the family £7�2m in tax�

• None of the planning they undertook was considered ‘aggressive’ by their tax advisers and all the assets ended up in their ‘right’ place, with personal assets outside the business and business assets inside�

• The vision of the business, and views on succession planning, with the two children continuing to be involved beyond the earn-out period, became as much a driving force in the discussions as tax efficiency�

• Because the entrepreneur approached us 12-18 months out from the eventual sale, we just had enough time to both help him bring together his advisory team and make some pre-sale changes that had a big impact on his (and his family’s) post-sale position� He noted recently that the exit has gone extremely well, all things considered, but that now the deal is done, he feels busier than ever (though it should be noted, he did have a healthy tan!)�



Your familyIn this section, we focus on some of the threats to your, and your loved ones’, financial well-being� Some entrepreneurs directly involve their families in their business, while others find their loved ones have no interest in it whatsoever (except for how much of the entrepreneur’s time and energy it takes up perhaps), but what almost all families of entrepreneurs have in common is their financial wellbeing is reliant on the success of the business�

If there is nobody financially reliant on you, we appreciate that this section might be less pertinent, but we nevertheless suggest you take a few moments to look at the guidance on business protection trusts and pensions, as these areas are relevant to all business owners�

Know thyselfIn the section on You, we explore some of characteristics entrepreneurs tend to have in common, but we’ll pre-empt that a little here by briefly mentioning three that are highly relevant to the reliance an entrepreneur’s family has on the success of the business:

1� Entrepreneurs tend to be more willing to take risks�

2� Entrepreneurs are more likely than most to be optimistic�

3� Because they exercise greater control over their destiny than those employed, entrepreneurs tend to be more susceptible to ‘attribution bias’ – the illusion of control over elements of life that include a decent-sized slice of chance in their determination�

Willingness to take calculated risks and optimism can of course be positive traits, especially when backed up by talent and hard work, but it is worth taking a moment to consider some of the threats to that talent and hard work having enough time to deliver financial security�

Clearly, the greatest threats are economic and commercial, many of them specific to the country or countries and sector in which the business operates� They will vary from business to business, and our starting assumption is that entrepreneurs know more about them than we do� As such, we have sought below to touch on some of the threats to your family’s financial security that are pertinent during the 36 months before selling the business and may not be on your radar�

Equity in the businessThe family of a high-flying employed individual typically enjoys a significant measure of financial security, even if the individual concerned is unable to work due to illness/injury or dies prematurely� The financial future of the families of entrepreneurs, in contrast, tends to rely on the value of the equity in the business� In the Start-up and Growth phases, it’s normally fairly clear that this value is low or even zero� While this doesn’t always mean there is adequate provision in place, the iceberg is at least ‘in plain sight’�



Business succession arrangements are just as applicable for a single ownership business. One cautionary tale demonstrates why: the Harding sisters inherited a business due to the sudden death of a father who had not put in place proper planning. The resulting dispute between them eventually led to a judge winding up the company because it couldn’t function properly, surely not the fate their father would have wished for the business he built.2

The Pre-exit period presents a subtly different challenge, not only because the anticipated 36 months to sale can easily stretch out to a much longer period, but also because during that period there is often a very real sense of the equity in the business being of significant value (and with that a feeling of being able to ‘self-insure’)� And yet, until that money is received in a bank account, it is only ‘on paper’ and the post-tax value can vary dramatically – especially if something happens to the wealth creating individual�

Finally, before the deal is done, there may be an option to put part or all of the equity in the business into a trust� This will not be right for every entrepreneur, but once the equity turns to cash upon sale, there could be a prohibitive tax charges moving that cash into a trust (see Business Property Relief below), so failing to at least explore this option during the pre-sale period could mean a unique opportunity is lost�

Business�protection�trusts�and�shareholder�agreements

“It is about the right amount of money, getting into the right hands, at the right time.”

James Austen, Solicitor at Charles Russell Speechlys

A poorly written business protection trust or shareholder agreement (sometimes called a cross option agreement), or worse not having one at all, can lead to chaos should you or a co-owner fall ill, suffer a serious injury, die prematurely or decide to leave the business� Typically, the right provision will allow the other owners to buy, or the loved ones of the affected owner to sell, the equity belonging to that owner� As either side can trigger the exercise of the option, it avoids any marriages of inconvenience ensuing, and if neither wishes to exercise, any shareholder protection payment (see below) essentially becomes a Key person cover (see above) payout for the business�

These ‘business wills’ should set out clearly what would happen in certain circumstances, so that you don’t find yourself across the boardroom table from a co-owner’s spouse or children, or find that paralysis engulfs your business� They can also set out the ‘rules of the road’ for disposing of equity in the business�

In the event of death of an owner, a shareholder protection (insurance) policy can provide the injection of liquidity to facilitate exercise of the rights under the agreement� If there is no policy in place, or the event concerned doesn’t trigger a payout, refinancing or an externally sourced investment may be required to acquire the equity of the party that has suffered a misfortune�

Rounding off this important, if slightly ‘dark’ area – a Lasting Power of Attorney should sit alongside all this, to set out who should represent the interests of an owner, should they lose physical or mental capacity� After all, the Court of Protection is not many entrepreneurs’ idea of the perfect business partner� 2

2�Re Brand v Harding;�(full�case�reference�[2014]�EWHC�247�(Ch).



How much does insurance cost?Some�insurance�requires�medical�and�financial�underwriting,�and�clearly�the�figures�are�simply�indicative�(they�are�based�on�an�‘office�based’�non-smoker,�age�45)�but�they�give�you�an�idea�of�what�some�of�these�policies�can�cost�on�an�annual�basis:�

Income protection�of�£150,000�p.a.�from�six�months�absence�until�return�to�work�(or�age�65)�–�£4,321.�Income�protection�insurance�pays�an�income�on�the�insured�becoming�unable�to�work�due�to�illness�or�injury.�There�may�be�significant�restrictions�on�the�scope�of�this�cover.�

Level Term Assurance�of�£1m�of�life�cover�for�10�years�–�£1,008�

Critical Illness Cover�of�£1m�(with�Level�Term�Assurance�‘thrown�in’)�for�10�years�–�£5,646�(Critical�illness�polices�cover�only�certain�specified�illnesses.�It�is�important�to�read�the�key�features�documents�for�these�and�to�understand�their�limitations.)

Whole of Life Cover�of�£1m�–�£11,356�(This�is�life�assurance�that�will�continue�until�death�provided�that�premiums�due�are�paid.�Typically�it�will�have�no�value�other�than�on�death�-�no�surrender�value.)

See page 22 for fuller explanations of these insurance policies.

Sharing�the�vision,�for�the�sale�and�beyond,�with�family

“Aligning everything is key, and that includes your family. As with members of staff, I wouldn’t necessarily tell them everything, it’s

sometimes fairer to iron out some of the ups and downs.”

Ashley MacKenzie, founder of Base79, which recently sold for c.£50m,

At the fundamental level, being an entrepreneur doesn’t tend to be a team sport� Engaging with family about the vision, and what it might mean for them, is a critical area all too often neglected in the lead up to a sale� How much to tell family is of course a personal choice, but although most entrepreneurs who have been through it suggest involving them, some also suggest that sharing ‘every up and down’ leads to a rollercoaster ride of risks or contradictions that is difficult without a holistic understanding of the business’ situation� If family members are involved in the business, such discussions will of course happen naturally, and be blurred with the approach you take to engaging staff pre-sale�

Could�personal�legal�liability�related�to�the�business�affect�financial�security?

The extent to which entrepreneurs worry about personal liability tends to vary depending on the business, an owner of residential care homes, for example, might be concerned about the family of a resident suing, should some kind of accident occur, but an owner of petrol stations might worry about environmental issues� There are few businesses, large or small, including tech and media, which are immune from this risk� Legal advice and careful thought around ownership structures are therefore important, if this is something that could ‘derail the train’�



Jargon debunked… Protection policiesProtection against unforeseen eventsAs touched on above, in considering the reliance your family has on your equity in the business, the families of entrepreneurs are perhaps more vulnerable than most to unforeseen events� In this section, we briefly touch upon some of the provision that can be vital to your family’s financial well being, should something unforeseen happen to you� Should a policy be effected, full details will be given in a key features document�

Income Protection (also known as Permanent Health Insurance or ‘PHI’) • A policy that pays a percentage (typically 60-75%) of your earnings, in the event an illness or injury prevents you from working for

a sustained period beyond an initial “deferred period” (deferment is typically 1, 3 or 6 months)� There may be significant restrictions on the scope of this cover� Should a policy be effected, full details will be given in a key features document�

• If tax relief is enjoyed on the premiums, the payout is likely to be taxed, if not, the payout is normally be tax free (your accountant is best place to advise on this, as well as how to fund any insurance policies)�

• The payout normally continues until the policyholder returns to work, or reaches a specific age (normally linked to retirement)�

• It is critical you consider this cover if your family relies on income generated by your efforts�

Life Assurance• A policy familiar to many, especially to those with a mortgage, it pays out on death� As a minimum one would normally consider

covering debt, but loss of income is also relevant here�

• Term Assurance covers you for a set period, e�g� until the children are 21, the term of the mortgage ends or retirement is expected�

• Cover can be on a ‘level’ or ‘decreasing’ basis, and a trust can be used to ensure a payout wouldn’t fall into the estate for Inheritance Tax purposes or be delayed by probate�

• If estate planning is part of the purpose, a ‘Whole of Life’ policy may be considered� As the name suggests, premiums are for life, and payment is linked to maintenance of those premiums, so particular care needs to be taken around affordability�

• Please note some policies do not have a surrender value, except some ‘whole of life’ policies. Therefore premiums will be lost if the policy is discontinued before a claim.

Critical Illness Cover (CIC)• Often ‘bolted onto’ life assurance, CIC pays out a lump sum if you are diagnosed with an illness or condition specified in the

policy� Not all illnesses are specified�

• Level of cover is often driven by the level of debt, but other considerations can also feature� The higher likelihood of payout is reflected when premiums are compared to ‘pure’ term-related life cover�

Relevant Life• This is a form of life cover available to business owners, to insure themselves (and if applicable, other members of staff)�

• Premiums are relievable for corporation tax, but the life assured does not normally suffer ‘benefit in kind’ taxation and any payout is normally tax free�

• These policies are not normally ‘portable’, if you sell the business, the policy may lapse�

Key person coverTo ‘debunk’ the jargon, this is insurance that offers companies some of the coverage options available to individuals (see ‘Your family’ section) with the payout used by the business to offset the impact of losing that person� Communicating effectively with key members of staff, perhaps combined with share incentive schemes and non-compete clauses, may mitigate the risk of losing them to a competitor either side of a deal� Such measures will not help, however, if they are lost to illness, injury or death – this is where Key person cover might fit into your planning

This is a ‘catch all’ term regarding insurance taken out by a business on a key employee� Most policies are life assurance in nature, but some cover illness or injury preventing the employee from fulfilling their duties� The payout is normally used to cover recruitment costs and any short-term fall off in revenue or profit might fit into your planning�



The qualifying criteria for Business Property Relief (BPR)

are broadly similar to those for Entrepreneurs’ Relief.

Equity in an unquoted trading business, and (at a reduced level of 50%) assets owned

by the individual but used by a qualifying business, are exempt from UK Inheritance Tax provided certain criteria

are met (e.g. being owned for 2 years and on death). This is

an area the accountant in your advisory team should be able

to help with.

Undertaking�the�basic�estate�planning�steps

There is a substantial gap between the amount of planning undertaken and the need for planning, perhaps partly as a result of not knowing where to start� Over half of wealthy individuals do not have a current and valid will3 and 23% do not have a will at all4� At the same time, a recent report estimated that developed countries will see a huge transfer of investible wealth over the next 30-40 years� In the US, for example, from 2016 to 2020 over USD1�5trn is set to pass into the new ownership� From 2026, this level is expected to increase to USD2�5-2�8trn per annum5, presumably as the ‘Baby Boomers’ reach expected mortality ages� The following questions are worth considering, and discussing with your advisory team, if this notion of a ‘planning gap’ resonates:

• Have you thought about legacy at all? If so, what planning have you undertaken and what has stopped you from doing more?

• Do you have a will? Is it current?

• Is there a Lasting Power of Attorney in place? An inability (be it physical or mental) to make decisions, freezes the wealth creation of an entrepreneur, potentially also leading to dramatic erosion of existing value�

• How much do you wish to help loved ones financially? When? How? Have you explored gifting some or all of your equity to a trust before sale? Do you anticipate philanthropy playing a part in your plans, either now or in the future?

• Does your equity qualify for Business Property Relief (BPR) that will be lost on sale? Are there pre-emption rights in the articles of association that could compromise BPR?

• What would happen to the business if you died? What does the partnership agreement or the articles of association document say? What if a quorum cannot be reached?

3�Barclays�Wealth�Insights:�Volume�14�(2011)�available�at�www.barclayswealth.com�4�Wealth�Insights�Research�for�RBS�(April�2013).�5Accenture�report�‘The�Greater�Wealth�Transfer’�(2012).



SSAS to SIPP? When business partners consider selling a business, reviewing pension arrangements becomes even more important if their arrangements are intertwined. A ‘joint’ Small Self Administered Scheme (SSAS) that perhaps owns the business premises may make sense when in business together, but if each now wishes to go their own way with different risk tolerances, target retirement dates and priorities around succession planning, transferring to separate pensions (such as Self Invested Personal Pension (SIPP)) could be worth considering. Remember that whatever steps you take, the investments you hold within a pension can fall in value as well as rise and you may not get back what you invested.

Complexity; it can be a threat to financial well being either side a business sale. What might work, when the same person is in control of both business and personal spheres, may become problematic once the business is sold. This is also the case where estate planning is concerned, the number of high court cases relating to wills and probate has risen seven fold in recent years.6

In our experience, partners of professional services firms understand the importance of protecting their family against something stopping them from earning more readily than most, because they often know a partner, either of their firm or another, that has been affected by such an event. Being an entrepreneur tends to be a more solitary endeavour, in terms of interaction with peers, so it’s perhaps no surprise that with the possible exception of ‘sports and media’, it is the most under-insured client segment we encounter.

Pensions, property and the blurred lineBuilding a successful business takes time, and along the way most entrepreneurs accumulate some financial ‘baggage’ which may need tidying up in the run up to an exit� Pensions, property and other non-business assets should help secure the financial future of both the entrepreneur and their family, but they may have become ‘mixed in’ with business assets or arrangements – leading to difficult conversations with potential suitors and inaction in terms of important decisions�

How�is�your�pension�structured?

You may hold the view “My business is my pension” and have little or nothing in pensions� Alternatively, you may have used your pension as part of your business planning, owning the premises within it, extending loans to the business, or simply using it as a tax efficient way to extract profits/keep cash levels down before a sale� If you do have a scheme, it may be a SIPP, SSAS, PPP or GPP, but whichever acronym leads to you receiving enough paperwork to require an extension on your home, Pre-exit is a critical time to review those arrangements with your advisory team:

• Is there a spousal bypass trust in place for the pension, so that it wouldn’t add to your spouse’s Inheritance Tax exposure upon your death? If not, should there be?

• Should an employer contribution be made to the pension, pre-sale?

• Are there any assets that should go into, or be transferred out of the pension? (An in specie transfer may be possible, if you prefer not to sell the asset�)

• What are the implications of the sale for pension arrangements sponsored/administered by the business?

Are�personal�assets�like�the�primary�residence�secure?�

Whatever arrangements someone has in place, it is worth ensuring that personal assets, such as the family home and ‘rainy day’ cash, are secure and accessible� This is not just about keeping the will current and having a sensible level of insurance, but also simple steps such as putting an asset in joint names with a spouse (which means it is not tied up in probate upon first death�)

Is�there�a�‘lifeboat’�of�assets�to�support�family,�regardless�of�success�of�the�business�exit?

There is strong argument for extracting significant value from the business, if possible, before a sale draws close� This means there are assets, other than equity in the business, which can provide some measure of financial security for your family� This is particularly important given that, as noted above, the pre-exit timescale is often a moveable feast and it’s not unusual for entrepreneurs to decide to step back from the process and spend a further three to five years building the business before revisiting the possibility of selling�

In the next section, on You, we touch upon how you can build out a ‘lifeboat’ for you and your family, be it during Start up, Growth or Pre-exit. This ‘lifeboat’ can become an engine for income Post-exit, underpinning lifestyle for life� For some it is also the catalyst for considering estate planning�6

6�This�document�should�not�be�construed�as�advice,�and�it�is�also�important�to�note�that�investments�can�fall�as�well�as�rise,�and�you�may�not�get�back�the�capital�you�invest.



YouIn the final of the three main sections of this white paper, we look at the importance of considering your personal financial goals during the period leading up to selling your business�

For many entrepreneurs, Pre-exit is the most hectic period they will ever experience� At worst, it can lead to physical or mental breakdown, or the disintegration of friendships and even marriages� Fortunately, with a clear sense of what you want the money to ‘do’ for you, it’s more likely to be stressful in a stimulating and positive way, and you will hopefully come to reflect on it as one of the most exhilarating periods of your life�

What follows should help you stick to a plan, get a good personal advisory team around you and have enough of a vision of your post-sale future that it can inform decisions in the present�

Establishing your ‘wealth philosophy’In our experience, few entrepreneurs have been asked “What’s the money for?” Perhaps this is because few start a business because they want to get rich; they do it because they want to fulfil a vision and perhaps change the world.

Whatever your motivation, if you succeed, there is every chance a financial windfall will follow, so taking some time considering what your philosophy is when it comes to money is worthwhile� This awareness of what is (and isn’t) important to you can help guide you both sides of the sale, in order to:

• Maintain focus, during the busy pre-sale period, on the desired post-sale position, so that the aimed for future can inform decisions made now�

• Preparing for the opportunities and challenges likely to be faced after the deal is done�

Few entrepreneurs have time during Pre-exit to construct a detailed personal financial plan, but what is possible is to start to sketch out some high level priorities and thoughts, to make sure the bigger opportunities that will be lost once the ink is dry on the deal are not missed� There are a few questions to ask yourself, to begin that process:

• What do you plan to do, post-sale? Am I a ‘serial entrepreneur’ or is this a one-off business? Could I exploit ‘Replacement Relief’ regarding BPR, post-sale?

• How do I anticipate my required income being generated, post-sale?

• Would I prefer some/all of the value of the business to fall into a trust at sale rather than to my estate?

• When I have more time, is philanthropy likely to feature more in my financial planning?

• How far do I want to go, on a 1-10 scale, to minimise tax on my income? How about

investment gains and Inheritance Tax?

• Do I want to give my children and/or grandchildren significant wealth? If so, when? How?



As you begin to reflect upon these questions, and sketch out your personal financial plan at a high level, it is worth considering how your finances have changed and how you expected them to change� Reflecting on the next journey can inform choice made on the current one� Figure 4 shows a common lifecycle for an entrepreneur’s financial situation�

Figure 4 – Typical life-cycle of an entrepreneur’s personal balance sheet

Few existingassets

Business leveraged,small current value

All savings inbusiness

Wealth mainly infuture potential

Accumulatinglifestyle assets

Wealth mainlyin business

Proceedsfrom sale of

business

Exit

Mature

Early Stage

Futureexpenditure

Little non-businessinvestment

Lifestyle assets

Selling the business often means that the flow of dividend and salary stops, but expenditure continues or increases� As such, while risk tolerance is normally fairly consistent, the relationship between cash flow and risk capacity is transformed�

�



Characteristics�common�to�entrepreneurs

Along with what coaches call ‘sustainable drive’, all world class athletes and sports people share exceptional self-awareness� Every strength and weakness, every ‘bias’ or ‘tendency’, be it physical or psychological, is assessed and informs their training and competitive decision-making7�

Negotiating a successful business exit and deploying the proceeds to achieve financial freedom, will similarly require an awareness of your particular personality traits, some of which will be helpful, and some of which could make intelligent, informed and rational decision-making more challenging (See tunnelling discussion on page 12)�

Clearly, no two entrepreneurs are the same, but our research suggests that certain characteristics are more common amongst entrepreneurs than other financially successful individuals� Taking a few moments to explore these with a member of our Behavioural Finance Team might be worthwhile, as you may just find some of them resonate when you reflect on your own personality� Figures 5 and 6 touch on some of these traits8�

Figure 5 – Entrepreneurs asked “Which of the following characteristics do you think are most important to be a successful entrepreneur?”

Leadership skills

Strong financial acumen

Strong desire to make money

High degree of competitiveness

Motivated by new challenges

Ability to adapt to change

Comfort and skill in making decisions

Creativity

Willingness to take risks

Perseverance

0% 10% 20% 30% 40% 50%

Figure 6 – How successful entrepreneurs tend to differ from the ‘average’

7�Jon�Curry,�of�Northampton�Saints�RFC8�Barclays�Wealth�Insights:�Volume�14�(2011)�available�at�www.barclayswealth.com

PersistencePercentage of respondents who agree with the statement “If I have to stop pursuing a goal in my life, I find it difficult to stop trying to achieve it; I can’t let it go.”

Failure-philia... Failure can lead to successPercentage of respondents who agree with the statement “Past failure in entrepreneurial endeavours increases the chance that a new business will succeed.”

Non-entrepreneurs 59%

Non-entrepreneurs 47%

Entrepreneurs 67%

Entrepreneurs 58%

0% 100%



Clients tend not to benefit from being the outlier (at either end) in an adviser’s ‘book’ of clients, so it’s important to consider size, in terms of both the firm advisers sit within and the businesses or individuals they are experienced in advising.

Racing�drivers�and�chauffeurs

When moving from running a business to investing in financial assets, entrepreneurs can sometimes resemble a racing driver who was comfortable doing 200mph when behind the wheel, but who might feel very different about risk when throwing the keys to someone else and climbing into the passenger seat� Having achieved stellar returns with their own business, with a high degree of control and risk, expectations of returns from diversified and liquid investment portfolios can be unrealistic�

No longer being in control can mean that not only is the potential return not as great, but also that it doesn’t feel like the reliability (risk), liquidity and predictability of a diversified portfolio of investments adequately compensates, compared to having most/all of one’s wealth in a single unquoted trading company� Many find a period of adjustment, reflection and education is needed, if that transition is to work� Even if only a portion of the wealth is to be reinvested, your advisory team are key to helping you settle upon a balance that works for you (See Figure 8)�

Blurred�lines

The line between ‘personal’ and ‘business’, as the content of this paper reflects, isn’t really there for entrepreneurs� Business interests are often an ‘extension of self ’ for many entrepreneurs and most view their financial life as a combination of business and personal assets, including intangibles such as the brand created, goodwill and the capacity for the business to create wealth in the future� For some, family members being part of the business further blurs the line� It is crucial during the 36 month period before an exit, however, to start to think a little about You in terms distinct from your business, and as well as building self-awareness as an investor in financial assets, detangle those two ‘worlds’ wherever possible�

Your personal advisory team

“Be careful whose advice you buy, but be patient with those who supply it”

Mary Schmich, journalist and Pulitzer Prize winner

Your personal advisory team may not get your full attention until you have completed the deal and have some breathing space, but it’s important to spend time during the pre-sale phase at least filling those seats and address the ‘headline’ issues (see Figure 7)� Indeed, many entrepreneurs engage a personal advisory team first, and ask them to recommend the members of the corporate advisory team�



Figure 7 – Your personal advisory team

Private�banker�

Most entrepreneurs who don’t engage this member of the advisory team before the pre-exit phase do so at that point in the cycle, but some wait until after a deal is done (not advisable for reasons explained previously)�

Private bankers advise or introduce advice across banking, credit, investments and specialist areas such as foreign exchange� Full service private banks also offer financial planners and investment managers through one integrated team, which can help shape a cohesive approach�

The ‘entry point’ for dealing with most private banks is placing £500,000 or £1m into investments, with differentiated propositions at £3m or £5m and again at £20m� Increasingly banking and credit are offered alongside investment management, rather than in isolation�

As with the corporate banker (see page 11), the private banker is your relationship manager and gateway to the services and research of the bank, for you rather than your business�

Chartered�financial�planner�

Most entrepreneurs have worked with a financial planner or ‘IFA’ previously, to one extent or another, and may continue with the same adviser when selling their business� It is important, however, to consider the individual’s qualifications, level of expertise and the typical size/complexity of client they deal with�

As well as offering advice on ‘regulated’ areas such as pensions, life assurance and offshore bonds, at lower levels of wealth (e�g� under £2m) they may also manage the investments within�

The main role of the financial planner is to help the entrepreneur form (and hopefully stick to) a long-term strategic plan for their personal wealth; they should be the glue that brings all the other threads together�

As well as large national firms, there are many smaller ‘boutique’ IFAs and also teams attached to private banks, wealth management firms or professional services practices�

Increasingly, Chartered status is ‘the standard’ level of qualifications for advising wealthy clients�

Accountant�or�tax�adviser

Some business owners find that the accountant who advises them on their business affairs has sufficient knowledge of personal tax issues that, with colleagues providing technical support when needed, they are also the right person to oversee personal matters�

Also, many entrepreneurs choose to maintain business assets and explore new ventures post-sale, which can mean the deal becoming less of a ‘watershed’ in terms of how their financial affairs are organised�

If, however, you feel the sale is going to take you in a completely different direction, or the corporate tax adviser has a fairly specific field of expertise, a private client accountant or tax adviser may be the best fit for this seat in the personal advisory team�

As with a corporate tax adviser, personality fit is crucial, but the size of the firm they work within, and the kind of clients they normally deal with, are also worth bearing in mind�

It’s also important to confirm who will be working on your affairs, your adviser handing work off to a team may be sensible, but it’s worth understanding how/when this occurs�

Private�client�lawyer

It is less likely than with the accountant role, but not impossible, that the corporate lawyer will also fill this seat in the personal advisory team� This is simply because due diligence and the other areas corporate lawyers focus upon tend to be quite specialised�

If a different lawyer is to fulfil this role, it is worth considering the same firm, if you’re pleased with the work of the corporate lawyer, but only if they are strong enough in private client law�

Investment�manager

Those with a relationship with a private banker and/or a financial planner, generally have investment management provided by them or by one of their colleagues�

Some entrepreneurs, however, directly engage a specialist to manage some investments, either before the sale (if it isn’t all tied up in the business) or after they receive the proceeds�

This is more common for those looking to invest over £10m, but even at that level there is a danger of too many advisers reducing the likelihood of a coherent overall strategy� There are a wide range of investment management firms in the UK, and most of their clients come from introductions from one of the advisers mentioned above�

What’s your ‘Lifestyle Number’? Almost all entrepreneurs want to do something entrepreneurial post-sale, but few want to reinvest all of their hard-earned proceeds� For many, the right balance can be found by identifying the capital amount they are likely to need to secure the income they want, for the rest of their life – net of tax, inflation and management charges� The Lifestyle Number determines how much is available for personal assets and legacy, as you build out the ‘architecture’ of your personal wealth (see Figure 8)� It also helps you identify how much can be redeployed, with a ‘clear conscience’, into new ventures�” Just like building a house, getting the design right and putting down firm foundations make sure

that the utility (what the money does for you) remains at the heart of every decision�

Figure 8 – Designing your post-sale financial ‘architecture’ to inform decision making, pre-sale

Income notneeded for

lifestyle/debt

Net of taxbusiness sale

proceeds

Inheritances/gifts received

#2 – Personal AssetsThings you’re passionate about

Main home (your ‘PPR’)Holiday home(s)Loans to friends

CarsTreasure (art/classic cars)

High risk projects

Personal Wealth

T#1 – Lifestyle Engine

Securing your lifestyle

Investment portfolio offering a steady income with liquidity, diversification, tax efficiency and the potential for growth

to offset inflation (N.B. investments can fall as

well as rise)

#3 – LegacyMoney for the benefit of others

Provisions via willsLifetime gifting to loved ones

Trusts & ‘FICs’Exempt assetsPhilanthropy

Life assurance

As noted in Figure 4, the exit sees cash replace the value of the business� This diagram shows how it can be deployed, to reflect your chosen goal prioritisation and taking into account capital set aside for new ventures� Risk capacity can then vary from one pot to another, and will be driven by the size, timescale, flexibility and importance of the anticipated cash flow need�

Securing�the�lifestyle�engine

When asked what advice he’d give other entrepreneurs, Michael Acton-Smith (Moshi Monsters creator and founder of Mind Candy) said “An investor once told me the main thing is to keep the main thing the main thing”� Of course, he meant in terms of a business, but once that business is sold, and it comes to your personal financial affairs post-sale, securing the Lifestyle Engine is the main thing�

You may have decided to wait until after the deal is done, to consider how you wish to populate the ‘three pots’ described in Figure 8, however you may be in a position to make a start before then, either during the Pre-exit phase (when drawings from the business can sometimes be relatively high) or earlier� The following three ‘non-controversial’ UK planning areas are worth at least being aware of, as they might play a part in providing a financial ‘lifeboat’ pre-sale and securing the income you want to have access to, tax efficiently, post-sale:



Many entrepreneurs ask us the (often multi) million dollar question: “How much do I need to support my family’s lifestyle?” Making decisions about personal assets, high risk investment ‘projects’ involving friends, or legacy planning are difficult without the answer. It ensures they aren’t`borrowing’ monies from the ‘Lifestyle Engine’ (see Figure 8), which underpins their financial security.



Family Investment Companies (FICs) are limited companies used as investment vehicles rather than trading entities, with some or all of the shareholders family members. Some entrepreneurs use them post-sale, as part of their tax deferral approach and/or for succession planning. Others run them alongside a trading company pre-sale.

Basic allowances – Few countries have as many tax efficient allowances for private investors as the UK: ISA & CGT (currently £15,000 and £11,000 respectively, per person, per tax year) and also pensions (in addition to the ‘tax advantaged’ investments mentioned below)� It may be possible to also consider the allowances of loved ones, though control of the capital is likely to be lost� A pension may have a role to play, as a tax efficient way to extract profits from a business and/or invest part of the proceeds� Their ‘scope’, however, is somewhat reduced from years gone by and the ‘Annual Allowance’ is currently £40,000 per annum and, unless you have some form of pension ‘protection’, the Lifetime Allowance cap is £1�25m� It may be possible to ‘mop up’ unused annual allowance from the previous three tax years, provided certain criteria are met�

Tax advantaged investments – In addition to the ‘basic’ allowances, each tax year, up to £200,000 can be invested into Venture Capital Trusts (VCTs) and £1m into Enterprise Investment Schemes (EISs) with the latter offering the ability to ‘carry forward’ the some/all of the previous tax year’s allowance, if unused�

Vehicles used as ‘wrappers’ for investment of proceeds - Offshore Insurance Bonds (OIBs) and/or Family Investment Companies (FICs) are sometimes used by entrepreneurs to ‘wrap’ long-term investment portfolios� It should be noted that although tax can be deferred, it is not avoided and some ongoing tax may be payable (e�g� corporation tax within a FIC)� These vehicles can also play a part in your legacy planning�

Pre-sale, some take a conservative approach to the ‘lifeboat’, given the risk associated with the business, but it is worth keeping in mind that post-sale this may be inefficient (see Figure 4)� The ability to reinvest some of the sale proceeds in new ventures may be on your mind, but unless you’re realistically going to put all the chips back on the table and deal another hand, and do so in the near term, it is probably best resist the temptation to sit with large amounts in cash for a prolonged period (though of course, rushing decisions about reinvestment of the proceeds is not a good idea)� While this is not everyone’s cup of tea, it’s also worth remembering that investing in a diversified portfolio and then borrowing against it to fund new ventures may be a tax efficient option worthy of consideration�

No matter what tax arrangements you have in place, the investments that you hold may fall in value and you should not invest for tax reasons alone�

Offshore Insurance Bonds (OIBs) are ownership vehicles or ‘wrappers’ that some investors use to invest in managed funds and ‘trackers’ over the long-term. Because the insurance company is the legal and beneficial owner of the underlying assets, a different structure of taxation applies, with the potential to defer tax until a ‘Chargeable Event’ is triggered (e.g. selling the OIB). Shares in a single company, be it quoted or unquoted, and ‘real assets’ such as properties, cannot be held in an OIB. It is an area where it is important to get advice from both a financial planner and an accountant/tax adviser.



Using the crow’s nestA timeline to assist you during the 36 months before an exit� Please also refer to the Checklist on the inside back cover

36�months 30�months 24�months 18�months 12�months 6�months

Pension�and�assets�crossing�the�‘blurred�line’�reviewed/simplified

Establish�post-sale�financial�goals�and�lifestyle�number

Protection�in�place�for�family

Corporate�advisory�team�reviewed/engaged

Consider�BPR�and�Entrepreneurs’�Relief

Consider�preferred�exit�shape

Personal�advisory�team�reviewed/engaged

Dress�the�business�for�sale

Promises�to�staff�reviewed/dealt�with

Communication�strategy�in�place�for�staff�



Concluding remarksIn a recent survey of ‘high net worth’ individuals, globally, it was found that only 45-54% (depending on which region of the world they live in) “feel positive about their personal finances”8

9� There is something both surprising and disappointing about that statistic, especially for those of us in the wealth management industry�

We can only guess at the reasons for this� It could be that ‘headaches’, such as how to invest or how much wealth to give to children (and when), weigh on the mind of half of the individuals questioned� Or it could also be that those individuals have been unable to find the right advisory team�

The same research noted that only 26% of the correspondents from the US (with at least USD5m to invest) felt their adviser had knowledge of all of their goals, so perhaps a dearth of strong and trusting relationships with advisers is part of the issue� Whatever the reason, it goes to the heart of the rationale behind us producing this white paper�

An�increasingly�important�group,�but�under-advisedOur experience of entrepreneurs mirrors the research above; in the sense they are often ‘under-advised’ and sometimes fail to make the most of the financial rewards available� Perhaps that isn’t surprising given they are time poor and (understandably) 100% focused on their business� In addition, they often ‘speak a different language’ to most professional advisers� At Barclays, we feel that their importance to the UK economy and our business means we should prioritise closing that gap� In a recent ‘working paper’ for Nesta10, Colin Mason estimated there are 3�4m SMEs in the UK, of which 6% are ‘high growth’, so arguably there are 204,000 ‘entrepreneurial’ businesses in the UK – and they all need the right advice�

The impact of entrepreneurs is wider than the number of businesses they run, people they employ, or the amount of wealth they create (as important as those things are)� They are the disruptors and ‘horizon scanners’ of capitalism� Those that think in such a ‘big picture’ way, tend to find the detailed, structured and jargonistic world of investing in financial assets uninspiring� This may be why many entrepreneurs who engage with financial assets find themselves feeling dissatisfied with the results, and leave large amounts in cash – vulnerable to inflation and opportunity risk – or create unwieldy portfolios of ‘buy to let’ properties they find it hard to pass it down to their children/grandchildren�

9��Windows�on�the�future,�CEB�Wealth�Management�Leadership�Council,�March�2014. 10��(January�2014�–�see�www.nesta.org.uk)



Enjoy�your�journey

Be under no illusions about how busy your life will be, not only during the 12 months before the deal is done, but the 12 months following it� It is perhaps because of how hectic it gets that people say it is never too early to plan for exit, but planning early is rare and some choices (for example choosing some advisers) can be tricky more than 36 months out�

As touched upon in this paper, either side of the sale is a period of considerable adjustment, but as long as you ‘have a plan’ it can be an enjoyable and exciting time� It marks the end of one journey, and the beginning of another, one likely to be less intense but no less rewarding�

If you are in the pre-exit phase, you have probably overcome extraordinary challenges already; you’re on the cusp of achieving your business vision� Not to realise the full value of all that hard work, or for the final stage of the journey to become a period of undue stress or regrets, would be a great shame�

Get�in�touch

Hopefully, this white paper can help you chart your preferred course, and you now feel in good shape to achieve the post-sale reality you desire�

We wish you every success with your journey; if you need our help with any aspect of it – please speak to your private banker, relationship manager or other Barclays contact or go to www�barclays�com/wealth

About�Barclays�

Barclays is a major global financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth and investment management with an extensive international presence in Europe, the Americas, Africa and Asia� Barclays’ purpose is to help people achieve their ambitions - in the right way�

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 140,000 people� Barclays moves, lends, invests and protects money for customers and clients worldwide�



Next stepsA checklist to help you when evaluating how best to proceed

What is it Level of importance Why ✓

Get your corporate/pre-sale advisory team in place

Very high – if you do nothing else as a result of reading this document, do this!

They will guide you through the pre-exit period and help you maximise your net result

Corporate financier/lawyer

Business tax adviser

Business banker

Corporate financial planner

Think about and discuss why you’re selling and what kind of business exit/buyer you prefer

High – it will inform all your other decisions

Understanding your motivation/having a vision of the exit strived for will greatly increase the likelihood of getting to a good post-sale position

Dress the business for sale, tidy up loose ends, lock down key contracts & consider some pre-sale DD

Medium to high – depending on how ‘tidy’ your business is in the first place

Not doing it is likely to lead to a reduction in price or the buyer walking away

Set out your plan to communicate with different groups of staff and cover off any promises

Medium – unless you already anticipate issues

Unsettling rumours and misunderstandings can destabilise the ship per-sale, at worst this could even lead you to abort the sale

Check your position/options re� Entrepreneurs’ Relief

High – unless recently checked Could mean the difference between a 10% tax rate vs� 28%

Review what happens to your/co-owner’s equity, should something happen to you/them

High – unless there isn’t anyone who depends on you financially

If you’re like those of most entrepreneurs, your family are heavily reliant on your equity in the business, plus you don’t want your co-owner’s family at the boardroom table

Put in place arrangements for your family, should your ability to create wealth be hit by illness, injury or death

High – unless there isn’t anyone who depends on you financially

The pre-sale period can take a lot longer than 3 years and is unpredictable, proper protection means your family is secure while you create enough wealth to ‘self-insure’

Review/simplify pensions plans, premises and assets crossing the ‘blurred line’ between business/personal

Low to medium – depending on how complex your arrangements are

Complexity is a threat: what might work while you are control of both the business & personal spheres, may become problematic once you hand off control of the business

Establish your philosophy in terms of what you want the wealth to ‘do’ for you

Low to medium – can be done post-sale, but not ideal

Next journey should guide choices on this one, also helps avoid missing unique planning opportunities

Begin engaging your personal/post-sale advisory team

Medium – start early as you’ll become busier and busier as you get close to sale, just as their role becomes increasing important

Business and personal spheres interchangeable for entrepreneurs, plus you will rely on their counsel post-sale so they need to help you prepare for that

Private banker

Accountant

Financial Planner

Lawyer

Work out your Lifestyle Number and give the ‘three pots’ some thought (see page 30)

Low to medium – can help guide your hand during negotiations, but really comes to the fore at sale

Encourages a flexible mindset, helps involve your family and puts the focus on your financial goals

Use the 36 month timeline to help you manage pre-exit

Low – covering off the main areas is the most important thing

Helps guide you on what should get your focus at different stages

This�document�has�been�prepared�by�the�wealth�and�investment�management�division�of�Barclays�Bank�plc�(“Barclays”),�for�information�purposes�only.�Barclays�does�not�guarantee�the�accuracy�or�completeness�of�information�which�is�contained�in�this�document�and�which�is�stated�to�have�been�obtained�from�or�is�based�upon�trade�and�statistical�services�or�other�third�party�sources.�Any�data�on�past�performance,�modelling�or�back-testing�contained�herein�is�no�indication�as�to�future�performance.�No�representation�is�made�as�to�the�reasonableness�of�the�assumptions�made�within�or�the�accuracy�or�completeness�of�any�modelling�or�back-testing.�All�opinions�and�estimates�are�given�as�of�the�date�hereof�and�are�subject�to�change.�The�value�of�any�investment�may�fluctuate�as�a�result�of�market�changes.�The�information�in�this�document�is�not�intended�to�predict�actual�results�and�no�assurances�are�given�with�respect�thereto.

The�information�contained�herein�is�intended�for�general�circulation.�It�does�not�take�into�account�the�specific�investment�objectives,�financial�situation�or�particular�needs�of�any�particular�person.�The�investments�discussed�in�this�publication�may�not�be�suitable�for�all�investors.�Advice�should�be�sought�from�a�financial�adviser�regarding�the�suitability�of�the�investment�products�mentioned�herein,�taking�into�account�your�specific�objectives,�financial�situation�and�particular�needs�before�you�make�any�commitment�to�purchase�any�such�investment�products.�Barclays�and�its�affiliates�do�not�provide�tax�advice�and�nothing�herein�should�be�construed�as�such.�Accordingly,�you�should�seek�advice�based�on�your�particular�circumstances�from�an�independent�tax�advisor.�Neither�Barclays,�nor�any�affiliate,�nor�any�of�their�respective�officers,�directors,�partners,�or�employees�accepts�any�liability�whatsoever�for�any�direct�or�consequential�loss�arising�from�any�use�of�or�reliance�upon�this�publication�or�its�contents,�or�for�any�omission.�Past�performance�does�not�guarantee�or�predict�future�performance.�The�information�herein�is�not�intended�to�predict�actual�results,�which�may�differ�substantially�from�those�reflected.

The�products�mentioned�in�this�document�may�not�be�eligible�for�sale�in�some�states�or�countries,�nor�suitable�for�all�types�of�investors.�This�document�shall�not�constitute�an�underwriting�commitment,�an�offer�of�financing,�an�offer�to�sell,�or�the�solicitation�of�an�offer�to�buy�any�securities�described�herein,�which�shall�be�subject�to�Barclays’�internal�approvals.�No�transaction�or�services�related�thereto�is�contemplated�without�Barclays’�subsequent�formal�agreement.�Unless�expressly�stated,�products�mentioned�herein�are�not�guaranteed�by�Barclays�Bank�plc�or�its�affiliates�or�any�government�entity.

This�document�is�not�directed�to,�nor�intended�for�distribution�or�use�by,�any�person�or�entity�in�any�jurisdiction�or�country�where�the�publication�or�availability�of�this�document�or�such�distribution�or�use�would�be�contrary�to�local�law�or�regulation,�including,�for�the�avoidance�of�doubt,�the�United�States�of�America.�It�may�not�be�reproduced�or�disclosed�(in�whole�or�in�part)�to�any�other�person�without�prior�written�permission.�You�should�not�take�notice�of�this�document�if�you�know�that�your�access�would�contravene�applicable�local,�national�or�international�laws.�The�contents�of�this�publication�have�not�been�reviewed�or�approved�by�any�regulatory�authority.

Barclays�Capital�Inc.,�Member�SIPC,�Barclays�Bank�plc�and/or�their�affiliated�companies�and/or�the�individuals�associated�therewith�(in�various�capacities)�may�already�have�or�intend�to:�(i)�seek�investment�banking�or�other�business�relationships�for�which�they�already�receive�or�will�receive�compensation�from�the�companies�that�are�the�subject�of�this�publication�(“Researched�Companies”),�such�as�underwriting,�advising,�and�lending�–�as�such,�it�is�possible�that�Barclays�Capital�Inc.,�Barclays�Bank�plc�or�their�affiliated�companies�may�have�managed�or�co-managed�a�public�offering�of�securities�for�any�issuer�mentioned�in�this�document�within�the�last�three�years.;�(ii)�have�an�interest�in�the�Researched�Companies�by�acting�making�a�market�or�dealing�as�principal�in�securities�issued�by�Researched�Companies�or�in�options�or�other�derivatives�based�thereon,�or�otherwise�hold�personal�interests�in�the�Research�Companies;�(iii)�appoint�employees�or�associates�as�directors�or�officers�of�the�Researched�Companies;�(iv)�act�upon�the�contents�of�this�publication�prior�to�your�having�received�it;�(v)�effect�transactions�which�are�not�consistent�with�the�recommendations�given�herein.

Barclays�offers�wealth�and�investment�management�products�and�services�to�its�clients�through�Barclays�Bank�PLC�and�its�subsidiary�companies.�Barclays�Bank�PLC�is�registered�in�England�and�authorised�by�the�Prudential�Regulation�Authority�and�regulated�by�the�Financial�Conduct�Authority�and�the�Prudential�Regulation�Authority.�Registered�No.�1026167.��Registered�Office:�1�Churchill�Place,�London�E14�5HP.

� � � � � � � � � � � ��Item�ref.�IBIM4006�February�2015

This item can be provided in Braille, large print or audio by calling 0800 400 100* (via TextDirect if appropriate)� If outside the UK please call: +44(0)1624 684 444**� * Lines are open 8am to 8pm UK time Monday to Friday and 9am to 5pm UK time Saturday and UK bank holidays� Calls to 0800 numbers are free if made from a UK landline�

** Lines are open 24 hours a day, 7 days a week except on 25 December when lines are closed� Call costs may vary - please check with your telecoms provider� Calls may be recorded so that we can monitor the quality of our service and for security purposes�

pre-exit planning for entrepreneurs in the uk - barclays · 2 pre-xpitxpil aen iexgpipf n ie 2...

Documents