Should you be following in Google’s footsteps?

Google recently announced that it is to undertake a major re-organisation of its business with the creation of a new holding company, Alphabet Inc.

This new company will manage its non-core business elements such as the investment and research divisions and the drone business.

The impetus for the reorganisation seems to be efficiency, but there are many reasons why a group of companies may choose to reorganise itself:

• Tax – many intra-group reorganisations take place specifically to secure tax advantages.

• Before an acquisition – when a group is planning to buy a new company or business, a pre-acquisition reorganisation can allow a company to form a new subsidiary in its group structure, which may be necessary for the proposed acquisition.

• Before a sale – a pre-sale reorganisation is often undertaken when a group or company wishes to sell part, but not all, of its business (eg. if a company proposes to sell one of its business divisions but that business is not already a standalone company).

• After an acquisition – to ensure that the acquired assets fit into the group in the most appropriate place (eg. a target company or its business could be hived down into an existing operating subsidiary of a group, or intellectual property may be transferred to an intellectual property holding subsidiary and then licensed back to an operating company).

• Efficiency grounds – a reorganisation for operational or administrative reasons (eg. to reduce the size of a group structure, or to provide a standalone subsidiary).

If you think your group or company would benefit from a reorganisation or restructuring please contact us or read our fact sheet on ‘Planning a reorganisation? Here is where to start‘.

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