The Case of the Outdated Corporate Structure
This successful contracting client had grown from being strictly an installer of HVAC systems for small industrial building sites to one of the largest installers and manufacturers of these systems in their field—participating in 3P institutional projects throughout the Province of Ontario. As a result of this growth success story, the company had built their own specialized manufacturing facility, acquired significant manufacturing equipment and acquired other real estate assets that were non-business related.
When the company was awarded yet more work it became clear that another manufacturing location would be required to deliver enough new capacity.
Scarrow Yurman & Co identified that the corporate structure that had served well for many years was becoming outdated. The asset protection needs of the client were in danger of being compromised and optimal tax minimization in the event of a future sale of the business, would be hard to achieve.
Together with tax Counsel, Scarrow & Co led the project to reorganize the client’s corporate structure. Business and non-business real estate assets were moved into the appropriate corporate entities, all manufacturing equipment was moved into a new manufacturing entity, and the installation business risks were isolated in a separate operating company. In addition, the corporate structure project helped the client identify the need to undertake significant steps in building the senior management team and analyze the options for exiting the business in the future.