The 2012/02/19 at 14:26
From the vantage point of a shareholding manager, a company handover consists in two important stages: the structuring of the assignor’s assets and the financial management of liquid funds stemming from the handover. The Banque Rothschild’s teams are structured around these dual needs: two complementary pillars that allow global support for clients. Once assets have been structured by the asset engineering team, the private bank offers a strategic asset allocation proposal stemming from an asset and liability management (ALM) approach that integrates client needs and objectives (lifestyle, tax, capital preservation, yield objectives), as well as mid- or long-term commitments (real-estate acquisitions or professional reinvestment, inheritance planning…).
“We offer a very high ratio of asset engineers in relation to private bank ers.” This comment from Grégoire Salignon, Asset and Financial Engineering Manager of the Banque Rothschild, illustrates the central role occupied by advice in this family establishment. This unique trait is one of the bank’s assets in the face of competition. “As well as our staff of asset engineers, we have a special family office team capable of carrying out all types of missions,” he adds.
The establishment offers global support for the professional assets of clients in the context of operations carried out by Transaction R, the mergers and acquisitions division dedicated to medium-sized businesses (advice on the handover of a family business to an industrial operator, the opening up of capital to an investment fund, capital development-type operations, mergers…). On top of this, support is also available for personal assets, whether financial or non-financial products. “We have the means to include in our investment universe most categories of assets existing on the market, whatever their risk level,” says Frédérique Bonnell, in charge of the private bank’s transversal services. “On the financial front, we offer shares and bonds as well as UCITS, structured products or private equity. In terms of management, one of the key elements is to make a detailed study of the client profile based on an ALM approach developed in collaboration with the EDHEC Risk Institute, taking into account, for example, lifestyle, tax situation and objectives. Depending on all these criteria and client aversion to risk, we determine the best-adapted strategic allocations.”
Once a strategic allocation approach has been defined, the private banker determines a tactical asset allocation integrating market scenarios as well as the client’s target portfolio. Priority is placed on operating with an open architecture. The offer includes solutions signed by the Rothschild house as well as products from external suppliers rigorously selected. A team dedicated to investment strategy and financial management services is available to seek the best solutions in every category on an international scope. The group is set up in Paris and Brussels, in London, Geneva, Zurich, Frankfurt and other countries.
The bank particularly targets clients with capital upwards of one million euros. As well as catering to wealthy individuals and self-employed professionals who are also broadly represented, support for company heads is one of the bank’s specialities. Within this population, it is necessary to distinguish between majority shareholders of family companies and managers at the helm of companies or beneficiaries of stock options. The population of shareholding managers and managers of LBOs is extremely heterogeneous.
Depending on the profile, issues to deal with are often very different. “We are undoubtedly amongst the best informed when it comes to specificities relating to support for company heads. We intervene in the context of family handovers where governance issues are to be resolved, or in the context of handovers to third parties. We are present in all aspects of such procedures, from capital gains management to the reorganisation of company governance. We have skills in bringing ideas as well as in implementing solutions. Our first aim is to win the confidence of the party handing over the company, this is why the support offered should envisage all scenarios and be carried out on a long-term basis,” details Grégoire Salignon.
Company handover comprises a multitude of facets to manage. The solid experience of the Banque Rothschild, a recognised leader on the market of mergers and acquisitions, is thus a leading asset. In terms of tax, the bank offers for example an upstream analysis of strategic options, assistance in constructing financial analyses and business plans, organisation of liability guarantees, and contributes to the struct- uring of the company’s holdings in the event of reinvestment. Its intervention begins early on in the upstream process, parallel to the handover operation, particularly when it is a matter of providing advice on assets. If the company is an SME, it is worthwhile examining the option of taking advantage of retirement measures. Indeed, when the company has been held for over 8 years, the party handing over the company can benefit from exemption from tax payable on capital gains from a handover at a rate of 19 %.
In the case of a pure and simple handover, recourse to donations is another option to consider. Another strategy is to use the option of creating or using existing equity holdings to capitalise on tax relief on a proportion of equities handed over. Naturally, support is also provided to families when they simply wish to hand over companies to following generations. France’s “Pacte Dutreil” (Dutreuil Pact) is an interesting tool for these families, allowing them to divide handover costs by four. The engineering department comprises staff with competence in both tax and legal matters. Their aim is to support the clientele in capital aspects complementary to financial management, with the aim of finding the best way to handle the capital regulations applying to their situation. This is generally translated by wealth tax optimisation, capital handover, advice on the creation of advantageous structures such as investment trusts.
“We are a structure in which every banker supports a limited number of clients,” indicates Frédérique Bonnell. “So our bankers are very accessible and close to their clientele. We offer tailor-made support, which implies close ties with clients. Depending on the issue to deal with, the latter can easily call on such or such an expert, whether they require a private banker, asset management assistant or asset engineer.”
The company’s history and structure are solid foundations on which its offer is constructed. “To offer a higher level of quality, it is necessary to have a relatively limited size with highly available teams. We keep in line with a family structure ourselves, in the constant interests of managing capital efficiently. By sharing our own experience of our group’s endurance, we benefit from credibility and legitimacy for the very long-term asset management services that we offer. A far-sighted vision that clients greatly appreciate,” says Grégoire Salignon. Affected by neither credit operations nor exposure to risky assets and debts, the Banque Rothschild has smoothly traversed the jolts inherent to the financial crisis. The year 2011 was even marked by a net growth in assets amassed. In the future, the bank is placing its bets on organic growth to progress, by strengthening its international network. “We above all envisage a systematisation of all synergies between the group’s different private banks, between Belgium, the United Kingdom, Switzerland and Germany,” concludes Grégoire Salignon.