A great business and a tax advantage into the bargain.
Inheritance tax (IHT) is one of the UK's most despised taxes, yet one people often pay little attention to until it's too late.
The threshold for being hit by this pernicious 40% tax is lower than you might think -- an estate valued at £325,000 for an individual, and £650,000 for married couples and registered civil partners.
Moreover, as a Foolish investor, you can justifiably hope to have assets in excess of this come the day you shuffle off this mortal coil. To learn why, grab the latest Motley Fool report -- "10 Steps To Making A Million In The Market" -- which is free to download right now.
Fortunately, there are a number of ways to escape or mitigate IHT. One weapon in the armoury is to invest in a portfolio of qualifying companies listed on the Alternative Investment Market (AIM).
There are some long-established, quality businesses on AIM, and a fantastic opportunity to invest in one of these firms looks like it could be brewing.
AIM to avoid tax
In an article last year, I wrote at length about the type of company that I believe is suitable for a portfolio as part of your IHT planning. In short, larger, established, dividend-paying AIM firms with net cash or modest debt fit the bill.
Conservatively run family businesses, such as James Halstead (LSE: JHD), Nichols (LSE: NICL) and F W Thorpe (LSE: TFW), are particularly attractive, not least because the very reason they're listed on AIM is often the IHT benefit to the family shareholders.
It's a company of this ilk -- pub group Young & Co (LSE: YNGA) -- that I'm going to tell you about today.
Young and good-looking
Young & Co has all the qualities I've mentioned and, in addition, I like its geographical focus on the seemingly ever-resilient London market. The company released its annual results recently and the directors were confident on the future despite the fragile economy.
Young & Co has two classes of shares: voting shares (LSE: YNGA) and non-voting shares (LSE: YNGN). There's no difference between the two other than the voting rights, but, at the time of writing, the YNGA shares are 627.5p and the YNGN shares are 515p.
Young's adjusted earnings per share came in at 33.41p for the latest year, so you're paying 18.8 times earnings if you buy the voting shares but 15.4 times earnings if you buy the non-voting shares. Also, the yield on the well-covered dividend of 13.93p is 2.2% for the voting shares but 2.7% for the non-voting shares.
It's also worth considering the asset valuation of a company like Young & Co with quality London properties on its balance sheet. The estate has actually been revalued recently at £497m, a large net uplift of £174m to book value. Net asset value per share now stands at 659p (or 616p excluding goodwill).
I think the non-voting YNGN shares look pretty attractive at 515p -- but I'm not rushing to buy just yet, because I think there's every chance I may be able to pick them up at a real bargain-basement price in the not-too-distant future.
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Young's largest single shareholder is a listed investment company, Guinness Peat Group (LSE: GPG). GPG owns 15% of the voting shares and a whopping 34% of the non-voting shares.
Last year, GPG's shareholders voted for an orderly realisation of GPG's investment portfolio over time. The company has already sold many of its investments, but so far appears to have made no progress on disposing of its substantial holding in Young & Co.
It may well be very difficult for GPG to find a 'trade' buyer for its Young's shares, and GPG's directors have said:
"In relation to substantial assets where realisation at an acceptable value proves unachievable within a reasonable time frame, the Board will consider alternatives which give shareholders direct access to the assets concerned."
In other words, GPG's individual shareholders could end up holding Young's shares directly. I think it can be assumed that many such shareholders would be looking to sell their Young's shares as soon as possible.
If this scenario plays out, I'm convinced there'll be an opportunity to buy into Young's great business at a rock-bottom price. Hence, I'm keeping a very close eye on the situation!
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> G A Chester owns shares in James Halstead, Nichols and F W Thorpe, but no other companies mentioned in this article. The Motley Fool owns shares in F W Thorpe.