Two brothers have owned and operated a small horticultural business growing plants from seed and they wholesale and retail their products. It’s a 7 day a week business, days are long and hard, there’s never been a shortage of customers. It’s a competitive field and prices are held down by imports from Eastern Europe. The business has given the brothers a living, they both love growing plants and are experts in the field, they’ve been in business over 30 years, the work is physical and most of it is done during the winter months in all weathers. They begin to contemplate retirement, they discuss this with their wives and all agree, it’s time to slow down. A rival business some thirty miles away are interested in buying the whole business and premises and offer to do so for the equivalent of 12 years profits plus the value of the stock and green houses. The princely sum of £825,000 is offered, a handsome sum but not much to share between them for a lifetimes work and after everything they’ve put into the business for most of their working lives.
The brothers approach their accountant to discuss the offer and to seek tax advice. The account suggests introducing SUCCESS, he’s done so with many of his other clients. What’s the approach to this situation ?
As with so many small lifestyle businesses, the brothers have toiled to build and preserve a reputation for fine products and great service, never really doing it for the “money”. Ideally they’d like to see the business continue with a safe pair of hands, a legacy for them to reflect upon in retirement, but to retire they need to release sufficient funds. The sad reality is that there is a limit to what the trading business itself is worth. The site is made up of a flat, well drained rectangular piece of land with 2 vehicular access points leading directly to the main road linking 2 villages. The site isn’t within the village boundary but it’s close and there are a number of large detached residential properties dotted along on both sides of the road.
A shortage of affordable modest houses is identified in the adjacent villages, it transpires that the local primary school is desperate for new facilities and is in urgent need of modernisation. The idea developed is to build 45 new homes. In line with national planning policies, 40% of the homes will be affordable with a mix of shared ownership and social housing for rental. A collaborative joint venture is formed with a national house builder and a housing association partner. The local planning authority fully cooperates with the design of the scheme, local residents and stakeholders are broadly supportive of the scheme and among the planning conditions imposed by the planning inspectors is a clause for a financial contribution to be made towards the local infrastructure including a significant sum to be awarded to the local primary school.
The scheme results in a new land value of £1.7 million pounds.
The trading business, stock and greenhouses are sold to the nearest competitor without the premises for a further £235,000 With the combined sum the brothers face a retirement lifestyle with a little more comfort. The legacy, the local primary school gets a new gymnasium facility, it’s decided that the new facility will bear the brothers family name! Success.
