Deal With Credit Issues

Income and corporation taxes are levied on income or profit. In the disposal of a business, proceeds from the sale of trading assets such as stock are included in the trading income of the business for the year in which they are sold and corporation tax might be payable on any profit resulting from the sale.

Income tax could apply to a business vendor in many other areas too numerous to mention in a book such as this. You should, as a part of your exit planning, review with your advisors the likely impact the sale of your business will have on your personal income tax, particularly with regard to the proposed timing of the sale. Early advice will give you the time to plan for the optimum outcomes. Also, it is difficult, and often illegal, to backtrack on transactions after they have been processed, so it is necessary to get it right the first time.

Where are the greatest areas of risk relating to the most significant strategic decisions?

What are the potentially dislocating events that could inflict the greatest damage on your organisation? (The scenario planning techniques outlined in Chapter 6 are valuable for assessing this issue.)

What level of risk is acceptable for the company to bear?

What is the overall level of exposure to risk? Has this been assessed and is it being actively monitored?

What are the risks inherent in the organisation’s strategic decisions, and what is the organisation’s ability to reduce the
incidence and impact on the business?

What are the costs and benefits of operating effective riskmanagement controls?

Are the risks inherent in strategic decisions (such as acquiring a new business, developing a new product, or entering a new market) adequately understood?

At what level in the organisation are the risks understood and actively managed? Do people fully realise the potential
consequences of their actions, and are they equipped to understand, avoid, control or mitigate risk?

What review procedures are in place to monitor risks?

To what extent would the company be exposed if key staff left?

If there have been major new developments in the organisation (such as a new management structure or reporting arrangements), are the new responsibilities understood and accepted?