What Accountants Need To Know About Restructures And Employee Buy-ins
If you’ve ever been involved in a business sale that felt harder than it needed to be, there’s a good chance the business structure had something to do with it. I’ve seen deals drag out for months, and I’ve seen them fall over entirely, not because the business wasn’t viable, but because the legal and tax structures weren’t built to support the transaction. Most of the time, these problems are avoidable. If someone had looked under the hood early enough, they could have been fixed well before they derailed the deal.
When a business is being valued for a sale or a succession plan, structure stops being a legal formality and becomes a valuation input. Because the second you involve multiple entities, unusual trust setups, or retained earnings floating around in places it shouldn’t be (or deployed in investments that have nothing to do with the business itself), you’re introducing friction. And friction kills deals. It complicates tax, it slows down due diligence, and it adds cost. Buyers don’t love complexity… they discount it. And that means it eats into value.
From a valuer’s perspective, clean structures make life easier. It’s faster to work out what’s being sold, what it’s worth, and how it’ll transfer. For instance, consider an NDIS business that operates out of a Discretionary Trust. Given that NDIS accreditation is not transferable, NDIS business sales are generally executed as the sale of a corporate entity, whereby shares are transferred from seller to purchaser, rather than as a business assets sale. This is because the entity that is accredited (the company) can change hands without the business being interrupted. The introduction of a trust creates complexity. It adds more steps and uncertainty… which reduces value.
This is where accountants are in a unique position. Most of these problems aren’t necessarily legal problems; they’re timing problems that will likely need the assistance of a commercially minded lawyer at some stage. The structures that create headaches at sale time probably made sense at the time they were set up, but what worked in year three doesn’t always work in year thirteen. Unless someone flags that along the way, the business can walk into a sale unprepared. And that’s where you, as the adviser, can make a difference. If you spot the cracks early, you can help your clients address them before they manifest in some undesirable way.
Restructuring too late almost always means paying more. And yes, restructures can be a pain in the arse, but that’s nothing compared to trying to sell a business that can’t legally be sold in its current form, or whose contracts are not legally transferable. Once a buyer is at the table, it’s often too late to move the pieces around without triggering tax consequences, blowing out timelines, or spooking the buyer altogether.
I’ve worked with Joanna Oakey from Aspect Legal, and she’s got no shortage of horror stories from owners who left it too late. The tax consequences alone can run into millions of dollars. But restructuring early, or doing it without context, can cause damage too. That’s why it is important to have an experienced, commercial team with the expertise required involved as early as possible. It’s not about accountants trying to be lawyers. It’s about making sure the right people are at the table at the right time, and that the structure actually supports the strategy.
So when you are looking at a business, considering its structure and quietly second-guessing yourself, then ask someone to assist. Don’t just nod along. Talking to someone with specialist tax, structuring, or legal expertise is always worthwhile. It can save your client thousands, and in some cases, millions. If you need a referral, just hit me up. A good specialist will always tell you when something is outside of their wheelhouse, so don’t be afraid to put together a team of experts that you can call on when you need their help. I’ve seen deals completely change from one insightful conversation with the right tax expert at the right time.
Transactions we are seeing in large numbers lately are employee buy-ins. At first glance, they seem pretty straightforward. The owner wants to step back, the staff want to step up, and continuity is preserved. But the reality is usually way more complicated. These deals are often staged, involve vendor finance, include complex shareholder arrangements, and sometimes blur the lines between leadership and ownership. The team dynamic can be severely tested. People who used to be colleagues now have skin in the game. And if you don’t get the details right, the deal can unravel just as quickly as it came together.
What usually happens is that everyone agrees in principle, shakes hands, and only then do they start looking at how it’ll actually work, which is quite simply arse-about. You need to know what’s being sold, how it’ll be valued over time, and what happens if someone pulls out or underperforms. If the valuation is going to change year to year, how’s that handled? If someone leaves midway through the deal, do they still get their shares, or are they sitting in some type of Unit Trust off to one side? If the funding is reliant on future profits, who carries the risk if those profits don’t show up? These aren’t just legal questions. They’re valuation, strategy, and culture questions. And most of the time, the accountant is the only one with the whole picture and is the trusted adviser to the business and owner.
You know the people. You’ve seen the numbers. You know the structures (or lack thereof). You understand the levers. That makes you the perfect person to raise the awkward questions, even if you’re not the one answering them. Because if no one’s asking those questions early, they tend to become problems later.
The bottom line is this: structure can either help or hurt value. It’s not just background noise. If the structure is messy, outdated, or doesn’t support the current intent of the business, then the valuation will likely reflect that. It won’t matter how tidy your spreadsheets are or how beautifully you’ve assessed comparable sales data: If the business can’t be cleanly transferred, its value is hypothetical at best.
That’s why more and more accountants using our products (whether that is Business Valuations Online or BVOPro) are flagging these issues before the business goes to market. They’re not doing the legal work; they’re spotting the pressure points and prompting the right conversations with the right team.
The best time to fix the structure was probably five years ago. The second-best time is now. So, if you’re helping a client think about sale, succession, or scale, make structure part of the conversation from the start. You’ll avoid headaches, protect value, and earn your spot at the strategy table rather than being ‘just’ their compliance adviser.