Leading Broker at Gunner & Co., Joshua Lee, gives some interesting insight into the current turbulent economy and what this means for businesses looking to sell.
“I recall in January seeing at least two financial services businesses using the marketing tagline ‘2020 vision’ to describe their approach to a new initiative or targeted growth for the year ahead. Now, with one of the most turbulent years almost behind us, it is little wonder that many firms have buried these ambitious messages and have returned to business as usual.
With the government spending more than at any point in the last 75 years in an effort to keep the economy open and jobs intact it is no wonder that many economists have begun to question how this debt will be repaid. Given the unprecedented levels of support, the usual methods of capital raising may still leave a sizeable shortfall, and many are questioning whether more creative methods will be introduced by the treasury. Regardless of what we may think will happen, it seems one reform is universally anticipated: changes to taxation.
Tax reform has been a focus of the Chancellor’s agenda for a while, with the threat of significant changes lurking at the last budget. The changes to Entrepreneur’s relief, whilst not inconsequential, represented a measured adjustment on the part of the government. CGT in particular has been a focus of the Chancellor and, if reforms are introduced, this will likely have an impact on your net position if you are considering selling the shares of your business.
With over five months to go to April, for those that are already considering the sale of their business, it may be pertinent to act now to achieve a higher net sale value. Furthermore, with a strong number of active buyers looking to make up for a period of reduced activity, there seems to be little or no adjustment to valuations. It may be worth considering selling your business before April 2021.
Don’t get me wrong, I am not suggesting you should ready your business for sale in the space of a fortnight and accept any offer that comes your way to rush a deal through. However, if your intentions are to sell within the next 18 months and you’ve already taken steps to prepare, then there may be value in engaging with Gunner & Co. now. The financial benefit to you could be substantial.
Our experience shows that the typical length of time it takes to complete a transaction is between 3 and 6 months and the pressure of the impending budget will no doubt motivate an acquirer to work to these timescales. If this is the position you are in, you have little to lose to investigate your options now. “