- Original Poster
- #1
There is a great opportunity to move 2 businesses forward which can hopefully reduce costs and increase sales for both in the future – providing a solution can be found whereby the two owners can come to a new agreement regarding a new company structure – which I am asking for your help (collectively) in trying to identify possible solutions.
Current scenario:
Two separate Ltd businesses, producing different but complimentary products to the B2B market currently operate out of 2 nearby but separately owned premises.
The 100% owner of business No.1 (Mr A) owns 50% of business No.2 , whilst Mr B owns the other 50%.
Going forward:
Both businesses have the opportunity to move forward into new premises which will show cost savings in terms of lower overheads as well as a staffing reduction, as similar functions (sales office, distribution setup) are combined. However, there are departments that will not offer savings as the products made require different skill-sets.
Whilst both can see the benefit of lower overheads and staffing integration, the problem comes with regards to control.
Mr A runs business No.1 day-to-day, whilst Mr B runs business No.2 day-to-day (with the exception of big business decisions concerning business No.2 which are made together). This system on the whole currently works well.
The predicament the potential move presents is regarding the ‘control’ aspect of what will have to be (in my opinion) a ‘new’ company going forward.
Whilst Mr B can currently make all the day-to-day decisions in running business No.2, this will no longer be the case as staff become ‘shared’ between the 2 companies.
Whilst this isn’t a question of ownership or dividends (the ownership of the new company would default to Mr A @ 75% and Mr B @ 25% (for the sake of argument, let’s assume this), which would leave Mr B in a situation whereby any day-to-day decisions – even affecting what was business No.2, could not be made solely by him.
Even if the percentages of ownership were tweaked (to say 66% and 34%) this still wouldn’t give Mr B any right of veto concerning the day-to-day running of the new company.
Mr A buying out Mr B isn’t an option and a 50/50 ownership split of the new company isn’t either.
Hopefully there is some advice out there that can suggest how the new setup can maintain some of its individuality going forward, or else how the new company can allow Mr B to keep some control of the part of the new business that is currently (in the main) run by him?
Apologies for the lengthy post – just trying to pre-empt any initial questions!
Current scenario:
Two separate Ltd businesses, producing different but complimentary products to the B2B market currently operate out of 2 nearby but separately owned premises.
The 100% owner of business No.1 (Mr A) owns 50% of business No.2 , whilst Mr B owns the other 50%.
Going forward:
Both businesses have the opportunity to move forward into new premises which will show cost savings in terms of lower overheads as well as a staffing reduction, as similar functions (sales office, distribution setup) are combined. However, there are departments that will not offer savings as the products made require different skill-sets.
Whilst both can see the benefit of lower overheads and staffing integration, the problem comes with regards to control.
Mr A runs business No.1 day-to-day, whilst Mr B runs business No.2 day-to-day (with the exception of big business decisions concerning business No.2 which are made together). This system on the whole currently works well.
The predicament the potential move presents is regarding the ‘control’ aspect of what will have to be (in my opinion) a ‘new’ company going forward.
Whilst Mr B can currently make all the day-to-day decisions in running business No.2, this will no longer be the case as staff become ‘shared’ between the 2 companies.
Whilst this isn’t a question of ownership or dividends (the ownership of the new company would default to Mr A @ 75% and Mr B @ 25% (for the sake of argument, let’s assume this), which would leave Mr B in a situation whereby any day-to-day decisions – even affecting what was business No.2, could not be made solely by him.
Even if the percentages of ownership were tweaked (to say 66% and 34%) this still wouldn’t give Mr B any right of veto concerning the day-to-day running of the new company.
Mr A buying out Mr B isn’t an option and a 50/50 ownership split of the new company isn’t either.
Hopefully there is some advice out there that can suggest how the new setup can maintain some of its individuality going forward, or else how the new company can allow Mr B to keep some control of the part of the new business that is currently (in the main) run by him?
Apologies for the lengthy post – just trying to pre-empt any initial questions!
