Recent work on demergers and reorganisations

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We have helped many businesses with a reorganisation or demerger.  The cases vary from resolving disputes between shareholders who have fallen out and want to go their separate ways to pre-sale planning.  Some of our clients are referred by their accountants who appreciate this is a very specialist and potentially tricky area.

The most common scenario is where we act for a company in which shareholder relations have broken down and the shareholders want to separate the business and assets so that each shareholder owns certain business and assets and can operate a separate business.

Recent examples where we have helped with demergers and reorganisations

Splitting a business after a shareholder dispute

Advising two shareholders on the statutory demerger of their jointly owned private limited company selling antiques. The shareholders had fallen out. They each wanted to create separate companies.

Successful demerger achieved

Care was needed on the areas in which the new businesses could operate to avoid unfair competition. Following the demerger, each shareholder was able to focus more directly on their respective areas of specialisation via their own separate legal entities.

Demerger of a business

Our client’s online business was taking off and to reduce risk we drafted a demerger agreement for the retailer demerging the online operations from the high street arm. The separate businesses had their own management team.  The different demands of each business could be fully addressed without splitting management time. Our client’s key concerns were over the goodwill, branding and continuity of supply contracts.

Reduction of capital demerger

We worked with a property management company holding multiple properties valued at different prices in different regions across the UK. We were acting for the company after the shareholders fell out and wanted to split the business by region.

Structuring the demerger tax efficiently

The business was split through a reduction of share capital.  We also advised on the tax treatment and the demerger was structured tax efficiently. We also supervised the work of property lawyers who needed to transfer certain of the properties to new companies.

Restructure of business to allow future employee shareholder takeover

We acted for a company wanting to separate its business from the property it owned (which the business operated from). It was proposed that in the (not too distant) future, the employees of the company might be offered the opportunity to purchase the company from the current shareholders in a Management Buy Out (MBO). Before doing so, the property of the business was to be separated so that following the MBO, the property would continue to be owned by the current shareholders and the business owned by the employees.

Drafting reorganisation and demerger documents

To achieve this, we drafted the required three corner reorganisation and demerger documents to spin out the business from the property.

Restructure of Webuycarstoday to facilitate investment

Gannons advised  firstly in the reorganisation of the business and secondly in obtaining investment via shares.  The investment vehicle of Jamie Waller, a British entrepreneur, acquired a 45 per cent stake.

How we achieved a good result

In order to enable the investors the opportunity to invest in certain parts of a business only, we successfully spun out one of the businesses of a company via a captial reduction demerger so that the investors could invest solely in a particular business to advance its software solutions and boost its ability to buy vehicles. The investors wishes to invest only in certain parts of the business and this reorganisation allowed that to take place.

The Gannons’ team that advised on the matter was led by Partner Helen Curtis.

  • Having walked us through the intricacies of the demerger process we were confident that Gannons could get the deal done. They’re advice and client care were second to none!