Is now the right time to sell?
Covid-19 and lockdown has brought about many changes for people and businesses across the North West, whether that be adjusting to new government guidelines, supporting our employees, managing cashflow, home working, home schooling and embracing the digital world in new ways to allow us to continue to work or trade.
As we continue to gradually emerge from what has been an incredibly difficult period for most people, the above question will apply to a wide variety of situations and circumstances. However, I want to focus on how this question applies when contemplating the sale of your business.
There will be many business owners who will understandably believe that the current economic climate and changing social environments do not provide an ideal basis to proceed with a disposal. However, there are businesses that have not only survived the pandemic but have become stronger as a result. These businesses and their leaders adapted quickly, realising that decisions had to be made and changes implemented.
Having demonstrated their ability to manoeuvre through testing times, these businesses will now be extremely attractive to those buyers looking for acquisitions. These may be trade buyers or private equity funds, with both having significant funds to invest in opportunities.
The fall in transaction activity during the pandemic has led to there being both a strong appetite to acquire and significant funds being available. This may therefore provide the perfect storm for sellers.
As part of any disposal process consideration should be given to whether a sale to a third party is the best option. An MBO or the setting up of an Employee Ownership Trust (EOT) are alternatives that can be the right option for many businesses.
The fall in transaction activity may provide the perfect storm for sellers.
Each comes with its own benefits and risks and business owners should obtain an understanding of these prior to making any decision.
All transactions have tax implications, so obtaining the right tax advice and understanding the options that are available are key considerations that form part of the planning process. The envisaged changes to the Capital gains Tax regime may lead to a high level of accelerated business sales, but one should never make decisions based purely upon tax.
So, to end where we began, is now the right time to sell? It might be, but the right advice will help you decide.
Baldwins (now Azets) have supported existing and new clients through this difficult transition period with our Survive, Revive & Thrive campaign , this period has also been a time of change for Baldwins. As of the 7th September we rebranded to Azets, the name of the largest established brand within the Cogital group, which Baldwins were a part of.
The rebrand is part of the next stage of growth for our group, as we unify under one strong brand, creating an accounting, tax, audit, advisory and business services company, specialising in providing start-ups, small, medium and larger scale businesses, as well as private clients, access to a suite of services comparable to that traditionally reserved for larger established companies. Our name may be changing but it will be business as usual and the same faces and local teams looking after local clients.
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