In the wake of several years of unprecedented levels of disruptions and challenges, the current market offers a window of opportunity for UK businesses. Even through sustained turbulence, many business owners have continued to provide first-class services across the UK’s corporate sector, whilst navigating the economic hurdles affecting the day-to-day operations of their businesses. Some have taken advantage of market conditions to grow, increasing M&A activity to bolster their operations, expanding
their regional and national reach, and benefiting from economies of scale.
A Time of Uncertainty
As with any election period, there will be political and economic upheaval over the coming months. UK businesses will face a variety of new policies to deal with. A concern for many business owners is that a shift in government policy may bring about a rise in Capital Gains Tax as well as the potential abolition of Entrepreneur’s Tax Relief.
It is difficult for business owners to plan when no change in policy has been announced but some rumours suggest CGT may be aligned with Income Tax thresholds which would represent a substantial change in tax costs for business owners. If these rumours became a reality, then CGT may increase from 20% to 40%, possibly even 45%. If ETR was abolished, then business owners would lose their ability to claim 10% taxation for their first £1,000,000 of sale value.
A Good Time to Sell?
Based on the feedback we are currently receiving, many business owners are considering their personal position and are looking to bring forward their exit timeline to ensure they have sold prior to the election period in 2024. Owners are attracted by the certainty of understanding what their taxation position will be and that they are still able to benefit fully from ETR. The M&A market is resilient and remains strong for the sale of quality businesses, with several buyers looking to utilise their cash to deliver their 2023 acquisition strategies. Increasing borrowing costs do represent an issue for acquirers who are looking to moderate the price which they will pay for target companies but based on historic averages, many
corporates are selling for above-average multiples.
While these conditions may change in the future and the balance of downside risk may be higher (especially with a possible switch in the UK’s political leadership), Altius Corporate Finance expects
M&A activity to continue to remain buoyant throughout 2023 and through to early 2024.
Are you thinking of selling your business?
Are you considering selling your business? Do you have any questions about what you may need to consider? One of our experienced sales negotiators are always here to chat through any important points you may want to discuss.
Are you looking to buy a business?
Are you looking to purchase a business? The ACF sales team are here to work with you. Perhaps you are considering entering a new market or expanding your presence within an existing one? Whatever stage you’re at ACF have a wealth of opportunities that may be of interest to you.
