A good time for shareholder changes
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Strategy's Valuations team is seeing an increase in minority shareholder buy-backs within private companies. At the moment, this is an attractive opportunity for both companies with a minority shareholder and the minority shareholder themselves.
From the company's perspective, buy backs may currently be more affordable than they were previously. Other advantages include streamlining the shareholder base and simplifying governance, allowing the business to be as focussed as possible on performance.
An exit could also be an equally attractive option for minority shareholders who may well see the advantage in extracting capital at a time where a potential exit may be uncertain and cash is appreciated. Critically, share buy-backs of this nature are currently very tax efficient, with the return taxable at a rate of 18%, and potentially 10% if entrepreneur's relief is available.
