Paul Kelly, Director and Solicitor, Business Structuring and Transactions team, KPMG Law, discusses the challenges of global entity reduction projects. Many businesses will have seen expansion and acquisitions over the years, which will have generated value but can often cause large and inefficient group structures.
These structures carry a ‘cost to exit’ burden. This can range from £10,000-£30,000 per entity, per year – so these are significant costs that don’t support revenue generation. If you then factor in ‘shadow’ costs, like increased tax scrutiny, greater demands on management time, and the risk of unknown liabilities, this can become a big risk for directors.