Asset Management Financial Advisers (AMFA) was set up nearly 30 years ago by Dick Carne and we were one of the original IFA founders of the Nucleus platform. Up to and during 2014 we had many discussions between the directors about the best way for director shareholders to take their value and exit the business as they approached retirement.

    Of the six directors in the company Dick Carne, Roger Badley and Peter Davis, were all turning 60+ and there’d been some discussions for a while at board meetings about what their ideal exit plans were and how to go about it.

    During our research, we looked at potential selling opportunities and had discussions with several organisations, but it never felt quite right either for the three looking to exit or the three remaining to run the business and plan for their exit at a date in the future.

    Culture fit

    If you’re selling a business to another company there comes with it a whole new culture, terms of employment, client proposition etc. This is a lot of change for everyone in the business and the client base. That didn’t feel right for us and we were sure there was another way to go about it that would suit the needs of all the shareholders and provide a future-proofed business for the benefit of our great team of younger advisers and admin staff.

    We did more research and spoke to our accountant and the solution we finally came to evolved from there. We opted for a VIMBO arrangement which in a nutshell enabled the exiting shareholders to get the value for their shares over an agreed period (in our case four years) and only pay entrepreneurs relief. The VIMBO has enabled us to go from six director shareholders to three.

    Agreeing value

    We all sat round the table and said “The number one thing we need to do is agree a value for the company.” This could have been the hard part but we came to an agreement quite quickly.

    So, we agreed on the value and through the VIMBO process the three exiting directors give up their shareholding completely from the start of the agreement with the amount owed them replaced by a series of interest-bearing loan notes.

    We pay an amount quarterly over four years i.e 16 equal payments, from the profits of the business. There is a rolled-up interest payment at the end. Importantly there is also the ability to pay it off sooner should profits allow, which obviously reduces the interest. Our aim is to complete the process within three years.

    The great thing is that it’s the profits of the company that pay for the VIMBO payments – there are no loans, personal guarantees and we don’t have to put our houses on the line or use anything as collateral. The company makes a certain amount of money and out of that profit we make a payment each quarter. We’re nearly two years in to the process and everything has gone smoothly so far.

    We got the VIMBO process approved from HMRC and the FCA before we went ahead and it had all been very amicable with everyone still contributing positively to the business and its succession planning.

    The other thing we did as part of the process is put 10% of the company into an employee benefit trust (EBT) so the staff members we feel are right for the taking the business forward in to the future can take on some shareholding without having to find a huge sums of money. That’s one important thing we did to try and encourage the family feel of the company and the succession planning culture, and to give people a real incentive to stay with business and hopefully take part in future VIMBO arrangements when the time is right for them.


    In all it had been quite a complicated process to set up, but it wasn’t too lengthy: we agreed a value at the end of 2014 and all the processes from then – legal work etc – took until August 2015 to put in place when we made the first payment. We’ve looked at some refinancing options recently to accelerate the process so we should finish it this year, about 18 months ahead of schedule.

    There are only 30 people in company so communicating this wasn’t much of an issue. We have regular sales and staff meetings, so there was already a regular opportunity to let people know what’s going on so that everyone was in the picture.

    Another advantage is that we’ve now got a process in place that we can roll out going forward - we know how it works, what to do etc - so doing a VIMBO next time someone wants to exit is going to be much easier.

    Walk this way

    I don’t see why other firms shouldn’t be doing it in this way - I think it’s a natural thing for people to do if they want the business to continue with family or trusted people. You want them to carry the business forward and it’s a way of them taking money out in a very tax-efficient manner.

    The most difficult thing for people will be agreeing a price and that will always be a tough part of the discussion.

    Traditionally it’s done on multiple of trail so anything between 2.5 and 6 times, depending on whether it’s an internal sale or external buy out. Internally there’s less risk, there are no third parties involved and you’re relying on people you already know well, so you would tend to value that on a lower multiple but for much smoother ride for all concerned, including clients.

    The letting go is also difficult – giving up all your shareholding, you might find that people might want to keep a bit. But you need to have a good succession plan in place otherwise if one of them decides to go – where do the clients go?

    Also keep in mind the cost of legal and accountancy fees for setting something like this up.

    My overall advice to anyone is to start talking about exit plans and succession planning as soon as possible - it doesn’t matter how old you are. Don’t bury your head in the sand about it - otherwise you’re never going to get your money out and get the value for all the hard work put in.

    Andrew Wood is happy to talk to anyone who is thinking of doing something similar with their business and needs help or advice.

    For more information and to learn more about succession planning and exit strategy for your business, download our white paper 'Planning your exit: A guide to creating a succession plan and exit strategy'

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