After years of never-before-seen levels of disruption and challenge, the current market has delivered a window of opportunity to businesses in the UK. Even though ongoing turbulence, several business owners are still able to provide first-class services across the corporate sector, whilst navigating economic hurdles that affect their day-to-day operations. A few have taken advantage of market conditions to expand, ramping up their M&A activity to strengthen their operations, and extending their reach regionally and nationally, whilst benefiting from economies of scale.
Uncertain Times
Just like during any election period, political and economic upheaval is to be expected over the next few months. UK businesses will be faced with a variety of new policies. Many business owners worry that a change in government policy may lead to a rise in Capital Gains Tax and the potential abolition of Entrepreneur’s Tax Relief.
With no change in policy announced, it is hard for business owners to plan. However, rumours suggest that CGT may be aligned with Income Tax thresholds. This would represent a major change in tax costs. Should these rumours come true, CGT would increase to 40%, perhaps even 45%. Should ETR be abolished, business owners would lose the ability to claim 10% tax from the first £1,000,000 of sale value.
A Good Time To Sell?
Based on feedback we have currently been receiving, many business owners are considering where they stand and are looking to advance their exit timeline so they can ensure they have sold before the leadup to the election in 2024. Owners want to be certain about their taxation position and that they are still able to benefit fully from ETR. The M&A market is sturdy and remains strong for the sale of quality businesses. Many buyers are looking to use their cash to deliver their 2023 acquisition strategies. Increasing costs in borrowing are an issue for acquirers seeking to curb the price they pay for target companies. However, based on historic averages, a large portion of corporates is selling for above-average multiples.
Even though these conditions may shift in time and there may be a higher downside risk (especially with a possible switch in the UK’s government), Altius Corporate Finance expects M&A activity to continue to stay buoyant towards the end of 2023 and early in 2024.
Are you selling your business?
Are you looking to sell your business? Do you have any queries about what you will have to consider? One of our experienced sales negotiators is here to chat about any important questions you may want answered.
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Are you looking to purchase a business? The ACF sales team is here to help you. Perhaps you are looking to enter a new market? Or maybe you want to expand your presence within an existing one? Whatever stage you’re at ACF has a wealth of opportunities that may be of interest to you.