Case study | Illustrative

Merging two group companies before a lender review

Two companies in one manufacturing group needed to become one before a banking review. We planned the route, the approvals and the tax in a single sequence.

Service
Merger and restructuring
Industry
Manufacturing and engineering
Read time
5 minutes
Led by
A partner
The situation

A manufacturing group ran two companies with overlapping customers, shared plants and intercompany balances. Lenders had asked for a single consolidated borrower ahead of a limit renewal.

The group had a date in mind but had not worked out which merger route applied, which approvals it would need, or what each step would cost in tax and stamp duty.

What we did

  1. Step 1

    Choose the route

    We compared a full scheme before the tribunal with the faster procedure available for certain group companies, and chose the one the facts allowed.

  2. Step 2

    Map approvals and consents

    We listed every approval needed: shareholders, creditors, the regulators and the lenders, with the order each had to come in.

  3. Step 3

    Test the tax and duty outcome

    We checked whether the conditions for a tax-neutral merger would be met, and estimated stamp duty and indirect tax on the transfer of assets.

  4. Step 4

    Build one timetable

    We combined the legal, tax and lender steps into a dated plan with an owner for every step.

Outcome

One plan that the lenders, the board and the tax team all signed off.

The group had a clear route, a realistic date and a list of what could slow it down. The lender review was moved to follow the merger, not run alongside it.

The intercompany balances were settled and documented before the merger, so the combined accounts opened clean.

01

A chosen route

The reasons for the procedure were written down for the board and the lenders.

02

A dated timetable

Every approval had an owner and a latest date.

03

Clean opening balances

Intercompany balances were reconciled before the effective date.

Deals | What to take from it

Mergers slow down when the legal, tax and lender steps are planned by different people. One timetable removes most of the delay.

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