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Business Legal Services
Demergers
Drive out additional value from your company or group and protect valuable assets by demerging your business.
Demerging your business, or splitting off part of its assets or activities, can be an efficient way to unlock value for shareholders. Transferring assets from one entity to another – whether that’s shares or a business unit as a whole – can be beneficial especially when you’re operating in different sectors.
By restructuring or spinning off certain activities into a new entity, the original business and the spun-off business can potentially end up being worth more than the sum of the original parts. This is especially true if your business has radically changed over the years as it has grown and matured. Demergers can also be a useful way of protecting a business from takeover or to resolve disputes. Find out how we can help demerge your business and increase the value of your business units.
Experts in corporate law
Our team can assist you across all areas of corporate law, including:
Unlock hidden value in your business with a carefully considered demerger
Our team of corporate solicitors can help your business by:
Understanding whether a demerger is right for your business
For example, if your activities are diverse and you feel that, by splitting up the business, each part can focus on its core activities, with separate balance sheets and revenue goals.
Showing you how a demerger can be structured to drive out the most value and/or achieve your goals for the demerger.
Advising you on the sale of part of your business if you want to fend off potentially hostile offers for your business and divest yourself of some of your assets.
Explaining the demerger options that are open to you and the tax consequences of each type.
Obtaining HMRC clearance for the demerger if applicable.
Registering your new business at Companies House.
Liaising with shareholders and investors during the demerger and showing them the benefits of the deal.
Reviewing your company’s legal documents and management structure as well as your shareholdings and providing legal advice as to how it will change as a result of the demerger.
For example, there may be considerations in relation to pension and employee share schemes or intellectual property.
Drafting the necessary documents
Including the demerger agreement itself as well as shareholder resolutions, making sure everyone’s interests are protected as far as possible and balancing the risks and rewards.
Smooth the way to greater shareholder returns with holistic legal support
What type of demerger you choose to implement depends on your company’s financial situation, tax issues, the factual and legal background to the deal, and the reasons you want to split off part of your business. We’ll help you navigate the choices available to you and come to a conclusion as to the best route for your business. We’ll work with you and your management team to answer detailed questions about your particular company and business dynamics, so together we can troubleshoot potential issues that could occur and that are particular to your situation, for example:
- Do you have assets like intellectual property or software that is used by the business as a whole, and that could be affected if the group were to be split up? How will these be handled, and will you ask for payment or license fees for use of IPR?
- What will happen to goodwill?
- Will your existing suppliers be prepared to deal with the new business? Will any consents be required, for example from landlords?
- How about business loans and other liabilities? Will these be transferred?
- Do you have distributable reserves available?
- What will happen to employees when the company splits?
Types of demerger to consider
Statutory demerger
A statutory demerger is where you create a new company from part of your existing business to acquire the ‘demerged’ business and assets, and its shares are transferred to the original company’s owners. The transfer is either by way of a dividend or by creating a new subsidiary and moving this to a new holding company, with the shares being transferred to the original shareholders.
Reduction of capital demerger
You can also demerge by reducing the share capital of the parent company and transferring a trading business to new shareholders or new holding companies as a repayment of capital.
Liquidation demerger
In a liquidation demerger, you can begin the process of liquidating your business and transfer assets to new companies. Shares in the new companies are given to original shareholders as a result of the liquidation of the old company.
How a demerger will benefit your business
Increase in shareholder value
Often, when a business splits off part of its activities into a second company, shareholders will be given shares in the new company. These two sets of shares are often worth more in total than the shares of the original company, in effect unlocking more value, and each individual business after the demerger will have a clearer market profile.
Drive out value and make your businesses more efficient
Where your business affairs have become overly complex, with different parts of your activities cross-subsidising others, splitting them out can make each part function more efficiently as a stand-alone entity, potentially with more access to loans and capital.
Streamline your management team and focus on specialist areas
Management can focus more keenly on specialist areas and manage the individual aspects of the business more productively.
Who we help
What type of demerger you choose to implement depends on your company’s financial situation, tax issues, the factual and legal background to the deal, and the reasons you want to split off part of your business. We’ll help you navigate the choices available to you and come to a conclusion as to the best route for your business.We help large and small companies, groups, holding companies, directors, investors, and shareholders. We support a wide range of UK-based companies at various stages in their business development. If you feel that splitting off part of your business would help you realise additional value for shareholders, or you want to demerge in order to focus management attention on particular aspects of your activities, get in touch. It’s vital to take good legal advice at the appropriate stage of a demerger to avoid unexpected tax charges and ensure the demerger is carried out as quickly and efficiently as possible.
Why choose Harper James Solicitors?
We can assist you with strategic analysis of your company and its structure and support you to demerge your activities. Our corporate solicitors have a wealth of experience in demergers and restructuring organisations. We are experienced in identifying your immediate needs and proactively working with you to troubleshoot potential issues, so the transaction is carried out as smoothly as possible.
Plus, we have all been recruited from top 100 UK law firms or from large international businesses and have advised clients both as external advisors and as in-house corporate counsel. Find out more about the team here:
Testimonials
What our clients say
Our solicitor managed to balance a tricky restructuring with lots of moving parts to create a simple solution that has passed muster with our stakeholders!
James Harris
Co-Founder,
Altairian Capital Holdings
We use Harper James because they understand the venture capital sector we operate in, know our business inside out and are always on hand to assist us in any way we need.
Doug Scott
CEO,
Potential
As a University spin-out getting the right team of lawyers to support our emerging business was fundamental and the team are always available to provide us with the invaluable guidance and support we require.
David Hodgson
CEO,
Amalyst
My colleagues and I have found them to be adept at dealing with the variety of challenges facing early stage companies. They are a trusted source for sound, sensible advice and practical deal management.
Jill Shaw
CEO,
Anvil Semiconductors
Quite frankly I was stunned at the low cost of the service given the value it provided us.
Dr Matthew Carr
CEO,
Luffy.ai
For us, the support of Harper James Solicitors has been a gift. The collaboration we have had has been of tremendous importance. The service has been superb value for money.
Iraklis Bourantas
COO,
Novoville
Our solicitor managed to balance a tricky restructuring with lots of moving parts to create a simple solution that has passed muster with our stakeholders!
James Harris
Co-Founder,
Altairian Capital Holdings
We use Harper James because they understand the venture capital sector we operate in, know our business inside out and are always on hand to assist us in any way we need.
Doug Scott
CEO,
Potential
As a University spin-out getting the right team of lawyers to support our emerging business was fundamental and the team are always available to provide us with the invaluable guidance and support we require.
David Hodgson
CEO,
Amalyst
My colleagues and I have found them to be adept at dealing with the variety of challenges facing early stage companies. They are a trusted source for sound, sensible advice and practical deal management.
Jill Shaw
CEO,
Anvil Semiconductors
Quite frankly I was stunned at the low cost of the service given the value it provided us.
Dr Matthew Carr
CEO,
Luffy.ai
For us, the support of Harper James Solicitors has been a gift. The collaboration we have had has been of tremendous importance. The service has been superb value for money.
Iraklis Bourantas
COO,
Novoville
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