Looking to realise some of the value in your business?Published on Business stage: Unlocking
Simon Thelwall-Jones, Investment Director, Merseyside Special Investment Fund discusses how equity release can help.
There are many options out there for business owners wanting to sell some of their shares, whilst retaining some involvement in the business. This is known in business as equity release.
What exactly is equity release?
It’s where the shareholders of the company effectively sell a proportion of their shareholding in return for a cash sum. For example, if your company is worth £2million and you sold 30%, the shareholders would receive £600k.
Why would you do an equity release?
There are several reasons. It may be that you want to bring the next tier of management into the business but feel you still need to stay involved if they are not quite ready to fully take over. Or, it could be the shareholders want to retire but the business may not be in the right shape for a full trade sell.
Another scenario is where the money is used to buy out one or more shareholders whilst the others remain.
Is it suited to any particular business?
It could be used for businesses in most sectors, however the business must not be too reliant on the owners seeking the equity release and must have a management team they can bring through or in some cases, an external team to appoint.
How does the process work?
In most cases, a company will need some financial backing in order to complete an equity release. This is where an organisation like MSIF can help. Quite often the finance would be provided through a mix of equity and loan funding.
How long does the process take?
Depending on the type of investment it could take as little as a month but if it requires a new equity investment, could take 3-4 months.
For further details visit www.msif.co.uk, call 0151 236 4040 or email email@example.com.
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