Strong market conditions have led to a buoyant deals market with many opportunities for businesses to sell, but CEOs are frequently losing out by cutting ties without having properly prepared, warns a business adviser from the South West.
A number of factors have led to favourable market conditions for sales, with large multinational companies and listed businesses aggressively pursuing growth through buying up businesses instead of investing in new products and services.
It’s due to a few factors – a staggering £1.3 trillion of private equity cash globally waiting to be used; a large number of credit funds introduced to the UK post crunch, and despite Brexit uncertainty, high street banks being in a very strong position.
As a result of these conditions, business owners have been receiving a lot of interest. Some however, have been reactively selling up without having given the deal the amount of thought and preparation it deserves, believes Ian Brokenshire, a partner at KPMG in Plymouth. Ian explains:
“When an investor calls to offer you a deal on your business, they’ve been thinking about what they’re going to get out of it for a long time – they’re prepared. However when you’ve been immersed in the day to day work of running your own business, it’s easy to get caught unawares. But selling up without enough planning can see you lose out on quite significant amounts of money.”
Ian advises that it takes at least a year for a business to get ready to sell, with various tax considerations around deals that affect both ordinary and ‘shadow’ equity being a priority to plan for.
It’s likely that the turbulent political scene will result in even more activity on the deals market as CEOs look to de-risk by selling all or part of their business before Britain leaves the EU.