August 23rd, 2018.

John Rigby, CEO of K3 Capital Group argues that current beneficial tax rules and market conditions means entrepreneurs should exit their business this year.

Mergers & Acquisitions (M&A) activity within the UK mid-market has significantly increased over the last five years as owners look to sell their businesses and capitalise on the market conditions. In addition, there is a greater awareness of the variety of exit strategies available – ranging from a full or partial sale, a sale to a trade buyer, a private equity deal or a management buy-out or in. In today’s extremely buoyant marketplace, it is wise to have an exit strategy in place, regardless of long or short-term plans, as it allows owners time to prepare their business for sale, thereby maximising value.

High M&A activity
These high levels of M&A activity, that include the acquisition of UK companies by both other UK firms or international buyers, can be partly attributed to the growing confidence in low-interest rate environments and cheap finance in many economies. In the UK, Entrepreneurs’ Relief is also currently still in place, pushing entrepreneurs to sell equity ahead of likely tougher tax rules, should a Labour government be elected.

UK-based trade acquirers continue to show signs of increasing activity as they release cash reserves built-up since the 2008 economic recession. These reserves are now being invested to facilitate growth initiatives, with many choosing a policy of more rapid growth by acquisition rather than doing so organically. According to figures released from the Office for National Statistics, a total of 88 domestic acquisitions, reaching £5.9 billion were completed in Q1 2018, £2.6 billion more than the same quarter for 2017.

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