07 Dec Successful Corporate Restructure of Property Group
A Perth based property development and construction business specialising in large scale commercial and residential building projects had experienced a period of rapid growth since it began trading 5 years earlier. Insolvency was not an issue in this case, with asset protection being the main focus.
In addition to expanding its core business of large scale commercial and residential building projects, a number of separate businesses were established to service clients and markets outside the core business, including the construction of smaller scale commercial and residential building projects, and the provision of property related consulting services, maintenance services and investment opportunities. The directors of the company held a controlling interest in each of these businesses, with other senior employees or consultants of the group owning the minority interests. The specific challenge was to bring each of these separate businesses and the main operating entity together under one umbrella to assist with branding and marketing, whilst ensuring that the risks inherent in each business did not impact on the other businesses in the group.
By working closely with the company’s tax advisors, the shareholdings of the various companies in the group were restructured to establish a new “parent entity” for the group. The parent entity then acquired, through a series of conditional share sale agreements, a majority or controlling stake in each of the different businesses which became subsidiaries of the new parent entity. By structuring the transaction this way, the group is able to optimise its branding and marketing efforts with the peace of mind knowing that the operational and financial risks of each business in the group are kept separate from each of the other businesses as they are owned and operated by separate companies.