Business owners have a lot to gain through having a wealth manager align their business and personal financial strategies, particularly when it comes to private client lending.
Daniel Porteous, Client Senior Manager at Brown Shipley, explains how his firm helped the owner of a business further its growth with a significant property purchase, without the need to withdraw a large amount from his investment portfolio.
Mr H is the second-generation owner of a successful language school which offers a range of courses to both domestic and international students. The college had no accommodation of its own and instead relied on a number of third-party businesses and individual households to house students during their studies. This had become a significant administrative task and one which only generated a modest income for the business. For some time, Mr H had been considering purchasing bed and breakfast style accommodation near to his college to enable him to add this as an ancillary service to the students and generate additional income.
A small 14-bedroom hotel located next door to the college went up for sale and Mr H decided this was an opportunity not to be missed
A small 14-bedroom hotel located next door to the college went up for sale and Mr H decided this was an opportunity not to be missed. Mr H has been a client of Brown Shipley for over 30 years and held significant investments with us but had never borrowed from us, so his initial thought was that he would need to withdraw £1.5m from his investment portfolio. At this point I was introduced to the client as a lending specialist to discuss other potential ways of funding the purchase.
During a number of conversations with the client, his ability to borrow against his investments was discussed which allowed him to borrow the funds required at a low rate of interest. The facility avoided the capital gains associated with selling such a large portion of his investment portfolio at that specific point. By considering how the purchase sat with his long-term plan and wider priorities, a range of funding options were able to be provided and the client ultimately decided to borrow, secured by his investments, to fund the property purchase.
During a number of conversations with the client, his ability to borrow against his investments was discussed which allowed him to borrow the funds required at a low rate of interest
Whilst Mr H had significant experience in running a business, he had no experience in the hospitality industry and no formal business plan in place. Working with the client, we helped him to better fit the purchase into his wider wealth strategy and formulate a business plan. In addition, the client’s company needed to be restructured prior to purchasing the hotel so consideration also needed to be given to this.
Working with the client, we helped him to better fit the purchase into his wider wealth strategy and formulate a business plan
Entrepreneurs make up a significant proportion of those coming to us to find a wealth manager, and are often surprised at just how valuable their advice and services can be. Whatever stage you are at, wealth managers can align your personal and business strategy to massively improve your financial position. Please do get in touch to discuss the myriad ways wealth firms help business owners.
By working closely with Mr H and his accountant, we were able to provide a company loan secured by his investment portfolio with Brown Shipley. This allowed the client to acquire the hotel within the correct company structure and secured by his investments. He was also able to meet his wider wealth plans by remaining invested, but also avoiding the potential capital gains associated with selling his investment which he had initially considered.
The client could then decide how best to repay the facility in the longer term, whether that be from the business profits, or a more controlled sale of investments in the future
The client could then decide how best to repay the facility in the longer term, whether that be from the business profits, or a more controlled sale of investments in the future. At Brown Shipley, we take the time to understand clients and their wealth plans over the long term. This case study is another great example of how we utilised the broader proposition at Brown Shipley to best meet our client’s needs and to find the most effective solution.
Case studies can be an invaluable way to quickly see how a wealth manager has helped people similar to you. While details will of course remain anonymous, a prospective adviser should have abundant illustrations similar to this they can share.
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