Is Your Business Structure Putting Everything You’ve Built at Risk?

How BridgePoint Group identified a critical structural risk (invisible to the business owner and their previous accountant) and resolved it without triggering a single dollar of capital gains tax.

The Business

This case study features a business operating in the medical equipment and pharmaceutical space. With over 20 years of trading history, the company had grown into a well-established operation turning over approximately $30 million annually, with a team of around 25 employees.

By any measure, it was a successful business. The owner had spent the better part of two decades building it from the ground up. But beneath the surface, the way the business was structured was quietly exposing everything he’d worked for to significant risk – and nobody had ever told him.

Does Any of This Sound Familiar?

Before we get into how BridgePoint Group solved this problem, it’s worth pausing on what made it so common – and so dangerous.

The business owner in this case study had a long-standing relationship with his previous accounting firm. Things were comfortable. The books were done, the tax returns were lodged, and life went on. He wasn’t aware there was a problem. And honestly, that’s the most dangerous place to be.

Here’s the situation he was in:

• He was the sole director and shareholder of the operating company, and he held those shares in his personal name.
• The company operated in a high-risk industry – wholesale of specialised medical equipment and pharmaceuticals – where the potential for significant claims or legal action was real.
• The business had accumulated significant value over 20 years. And that value was sitting directly in the line of fire.
• Moving the shares into a more protective structure (such as a trust) would have triggered a massive capital gains tax event. So it felt like a problem with no good solution.

If you own a business worth any meaningful amount and you hold shares in your personal name, this story is for you.

Why the Risk Was So Serious

It’s a straightforward reality: if your business has significant net assets, it becomes a target. Lawyers and creditors pursue claims when there’s something worth pursuing. A company with $5 in net assets isn’t worth suing. A company with $5 million in net assets is a different story entirely.

When shares are held personally by a director, there are limited options for extracting value to reduce that exposure without generating a significant tax bill.

Stripping out retained earnings via dividends is possible, but at the top marginal rate of 47.5%, that’s a costly path. And it doesn’t actually solve the structural problem – it just depletes the business.

The owner had been operating this way for nearly two decades. His previous accountants had never raised it as a concern.

What BridgePoint Group Did

When the client came to BridgePoint Group – introduced through a relationship, not because he knew there was a problem – the team identified the structural issue within the very first meeting.

Over the following two months, BridgePoint Group designed and implemented a group restructure that achieved two things simultaneously:

• Separated risk by restructuring the group such that the net asset position of the operating company – the entity carrying the day-to-day risk – was reduced to minimal levels.
• Did not inadvertently trigger any capital gains tax for the shareholder in the process.

The value of the business was preserved and protected – it was simply repositioned within a structure where it was no longer exposed. The shareholder’s interests were shielded, and the risk that had been accumulating for 20 years was effectively neutralised.

The restructure now requires straightforward ongoing management on a semi-annual basis, which BridgePoint Group handles as part of their continued advisory relationship with the client.\

The Real Takeaway for Business Owners

This case wasn’t about a complicated legal dispute or a business in trouble. It was about a thriving, profitable business that had unknowingly accumulated structural risk over two decades. A risk that could have been catastrophic if something had ever gone wrong.

We at BridgePoint Group put it plainly: every business owner should be asking themselves, “Where am I at risk of losing this business?” If you haven’t asked that question, or if your current advisers haven’t asked it on your behalf, the honest answer is that you probably don’t know.

There’s also an important lesson here about the relationship you have with your accountant. Comfort and familiarity are not the same as capability. The accountant who was right for your business at $2 million in revenue may not be equipped to handle the complexity of a $30 million operation – or to proactively identify the risks that come with that growth.

BridgePoint Group’s Nicholas Petrakis is direct on this point: “You want advisors to your business that understand business and understand risk. If we were just accounting and tax and prepared a tax return at the end of the year, we wouldn’t care. But we do care – and that’s the difference.”

Who This Is Relevant To

While this particular case involved a business with $25–$30 million in annual turnover, the structural risk it highlights is not unique to businesses of that size. BridgePoint Group considers this type of review relevant for any business owner with revenue from $1 million to $100 million.

If you’ve been growing your business for years – building equity, taking on risk, accumulating assets – and you’ve never had a thorough review of how your business structure actually protects you, now is the time to ask the question.

Speak With BridgePoint Group

When it matters, get a second opinion. BridgePoint Group provides accounting, tax, and advisory services to SME owners across Australia. If you’d like to understand how your current business structure stacks up – and whether there are gaps your current advisers may have missed – we’d welcome the conversation.

The advice that protects your business for the next 20 years starts with a single question. Let’s make sure you’re asking it.