Why your clients would be advised to act now if they want to sell their business.
As a lawyer, accountant, or other professional adviser, you may have clients who are keen to sell their business, but who are reluctant to go to market now because of today’s economic and political uncertainty. Quantuma’s Disputes, Investigations & Valuations team explains, taking action now will set up sellers to take advantage of an improving market and favourable prices. With transactions taking longer to finalise, it also makes sense to get the sales process in train early. Wait and it could be too late.
With the election results hot off the press, business owners may be wondering about the state of the market and whether this is a good time to sell their business. In our view, business owners would be advised to act now for the best outcomes, and here’s why.
Looking back, the last year has seen a combination of high interest rates and constrained economic growth – this has meant that deal appetite among trade buyers, private equity investors and other acquirers has been subdued.
However, with the right support, sales have still been getting done. In fact, our corporate finance team led deals to help over 20 founding owners sell their businesses last year and this year is shaping up to be even more active.
There is still activity across all sectors – the companies we have supported as lead deal advisers have ranged from Lifecast Body Simulation, a globally renowned leader in the design of medical manikins, to Challenge Packaging, a Sussex-based packaging manufacturer.
Economic uncertainty does mean that sales are taking longer, and buyers are being more selective. We are finding that buyers are asking more questions and carrying out more extensive due diligence. This means that transactions that would previously have been completed in six months can now take nearer to a year. The good news is that a transaction starting now will actually reach out into a more certain future.
Looking forward, business owners would naturally want to err on the side of caution. But, waiting until the economic recovery has taken hold could actually diminish the chances of success and open up more risks for business owners, than going to market now. We find that having deal conversations at an early point has several advantages for business owners, including:
- It allows enough time to get the deal done
- Owners can take advantage of favourable prices, and
- Avoiding potential rises in Capital Gains Tax – but for how long is in question
So, circling back to our original question, is this a good time to sell a business? In our view, business owners would be advised to get the wheels in motion now for selling their business, so the answer is a resounding ’Yes’.
Let’s talk
If you would like to discuss any of the issues raised in this article or how we can support you or your clients, please feel free to get in touch.
Rehan Ahmed
Managing Director
Restructuring & Insolvency
T: 07891347817
E: rehan.ahmed@quantuma.com
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