Companies which have grown by merger and acquisition can find themselves with complex group structures incorporating a large number of subsidiaries.
Some (or all) of these may be dormant or and each entity can cost up to £5,000 in compliance costs and management time every year. The savings to be made in cleaning up these structures can therefore be significant.
Maintaining subsidiary companies has other resource implications too. If they are trading, or any transactions are processed through them, management information has to be produced. This ties up internal resource. Senior management time is diverted into governance issues and away from the real issues affecting their business.
Complex group structures carry risks as well as costs. Large numbers of non-trading subsidiaries within a structure can raise questions with regulators and other stakeholders. They may also harbour contingent liabilities which are falling under the corporate radar.
Eliminating inter-company balances may deliver tax benefits. Corporate simplification is an effective way of delivering long-term cost and compliance benefits to an organisation with a fast payback period.
When to consider corporate simplification
Corporate simplification is a suitable option for companies looking to reduce operating costs, minimise compliance risk and achieve a simplified and more transparent corporate structure. Companies with high levels of merger and acquisition activities are more likely to have complex group structures which could be streamlined.
SKSi will conduct a review and make recommendations as to the most appropriate method of winding down, closing or eliminating relevant companies, outline the associated risks to the directors and the group and advise you how best to plan for this type of project.
Once approved we can then work with the management team to deliver solvent reorganisations, solvent liquidations, capital reductions and strike offs with an anticipated payback of 12 to 18 months.