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Should I stay or should I go?

 

Posted on 24 September 2015

A question originally posed by punk band The Clash, but equally relevant for Business owners considering a sale in today’s turbulent global economy.

At a macro level, in the global market there’s been an epic struggle between the forces of inflation and deflation in recent years and the recent stock market plummet and devaluation of the renminbi in China is the latest episode. Add to that record yields on bonds (and sky high prices), the crashing of commodity prices to 2008 levels, the runaway value of the US dollar, political unrest in Eastern Europe, stagnation in Europe and violent fluctuations in stockmarkets everywhere and you’d be forgiven for thinking the end of the world as we know it was nigh.

But what does it all mean for the UK M&A market? Well, judging by the much higher activity levels over the last couple of years, improved access to funding, hardening pricing and no let-up in the enquiry levels I would have to conclude that, for the foreseeable future at least, the market is buoyant. The level of exits from Buy-Outs supports this, hitting record levels in Europe for the first half of 2015, according to CMBOR. True, that could all change if UK pubic confidence is dented but there’s not really much sign of that if the increasing levels of consumer debt are anything to go by.

The capital gains tax regime remains benign, the application of Entrepreneurs Relief meaning the effective rate is often only 10% on lifetime gains up to £10million. However, a few tweaks in the last budget perhaps suggests that it is coming under review – it seems odd that there remains such a gulf between tax rates on income and gains.

So, is it a good time to stay or go? There is nothing more certain than the uncertainty of the future, and with world events as they are that’s quite easy to grasp. So, in general terms, if a business owner is beginning to consider exit or craves security then yes, now is a good time to get essential advice from an expert on timing and how to prepare the business for sale to maximise net value.                         

 

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