A good time for busines exit or succesion - high company multiples and before any scary tax changes?!
The latest Argos Mid-Market Index which shows movements in private company prices has just been published. It shows data up to Q3 2017 and indicates a record high of 9.5x. As you can see from the graph it has been steadily climbing since 2009. So if you're a business owner it's a good time to think about exit. Or at any rate to make sure you have a credible exit or succession plan in place. Many owners of private companies have much of their wealth locked up in their shareholding and so even an equity release transaction - perhaps by selling shares to a third party like a private equity house can help balance their personal portfolio.
The other factor I now start to hear in conversation with business owners is concern about the tax regime that a new government might bring. The capital taxes regime re the sale of company shares is particularly benign with Entrepreneurs' Relief effectively reducing the rate to 10% on the first £10M of lifetime gains. Whilst Entrepreneurs' Relief was brought in by a Labour government there is an up swell of concern that a Corbyn led government might change things.
None of this may happen of course but it does underscore the need for every business owner to have a plan for exit and succession - even if it is explicitly not intended to happen for some time.
We're running our Business Exit Strategies Seminar in Stevenage on 23 November the day after the Chancellor Philip Hammond's budget speech. So we should have clarity at least on his short term tax plans.
Our event, which is free, gives useful insights into a range of topics:-
- The current M&A market
- Strategic planning
- How to build value in your business
- Business valuation
- How to achieve succession through a management buyout
- Tax - how to mitigate and also how to use your tax affairs to build value in your company
- Company sales - how to sell your business, pitfalls, why some companies don't sell
There are a few places still available - and the venue (Novotel just off the A1M) is easy to get to from Hertfordshire, Bedfordshire, Northamptonshire, Cambridgeshire, Essex and North London. So have a look at our website for the full program and booking. http://www.pem.co.uk/corporate-finance/business-exit-strategies-stevenage