Like the rest of the business community owners of real estate businesses nationally are aging and they need a viable exit option. Often that option exists within – most have key staff within the business who are vital to the success of the business and many of whom are also keen to “run their own show.”
A specially constructed Peak Performance Trust allows these businesses to attract, retain and motivate key staff as well as providing for a gradula sale of the business over time.
These are examples of real clients utilising Peak Performance Trusts to fund Succession Planning within their business.
‘ABC Real Estate Pty Ltd’
Peak Performance Trust for shares-only investment
In the case of this client, the investment strategy for the Trust is simple – it will only ever purchase direct shares in the business, thereby giving participating employees an indirect ownership of the business’s equity. Its staff receive dividends and a bonus reward based on the profit performance of the business. If the business was to ever be sold, the PPT would benefit from the capital sale, and indirectly, the employees would receive part of that capital gain. Based on this simple strategy, the value of the PPT automatically replicates any change in the value of the business, therefore employees directly benefit (or otherwise) from any change in value which is largely driven by profit performance and is something that the employees can directly influence.
‘XYZ Real Estate Pty Ltd’
This business has also had success with setting up a trust for key employees – in this case a large property management base has been substantially expanded as the funds from the trust have been used to buy further property management books recently sold by a competitor in a nearby country town. The purchase was topped up with debt from Macquarie bank but the bulk of the funds came from the employee trust – employees are helping to fund the expansion of the business they now own a part of !
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