Blog
Is this a great time to sell?
December 7th 2011
Is this a great time to sell? Should you be thinking about your own exit if you are a company owner?
We have seen an increase in appetite to buy businesses over the last few months.
Larger corporates are now actively seeking new acquisition opportunities. Many of these have seen less acquisition opportunities during the recession and are keen to find quality acquisitions to help them get back on course with their growth plans.
We have also experienced aggressive appetite in some instances from private equity investors who are keen to get involved in high quality opportunities.
But what about selling to management teams, such as to your own management? There has certainly been some return to funding appetite for management buyouts. However specialist corporate finance advice should always be taken before starting down the MBO route as the key to these transactions is negotiating the right price and deal structure at the start and having a backable management team. More detailed advice on management buyouts can be found on our specialist MBO website.
Entrepreneurs’ relief has resulted in a low tax regime for most shareholders selling a small or medium sized company, with many able to achieve a tax rate of only 10% on the first £10 million of the gain. Entrepreneurs’ relief is unlikely to be abolished ahead of the next general election, meaning there should be a stable low tax climate for disposals over the next few years.
Should you be thinking about your own exit? Yes, always, even if it is many years ahead. You should always have an eye on your eventual exit and make sure that the decisions you take over the years are consistent with maximising the ultimate value of your business and helping make it more attractive to sell.
So is this a good time to sell? The answer is it depends on your circumstances. If you have a business that has performed well over recent years, despite the recession, then now is a good time to sell. However if your business has been adversely effected by the recent economic downturn then it may be wise to wait until your profitability has improved because the biggest factor impacting on the valuation of your business is its profitability.
It is always best to take specific advice at an early stage from a specialist corporate finance adviser. We would work with you, not just during the sale process, but also over the months and sometimes years ahead in providing independent advice and where appropriate in providing business coaches or mentors to work with you in getting the company into the optimum state for sale. Coaching is taken for granted by top sports people – it can also play an important part in getting a business ready for sale.
