The first quarter of 2022 continues to see buoyant M&A activity, as the UK emerges from the pandemic.
Recent statistics published by a leading mid-market M&A platform, Dealsuite, who compiled the trends for the second half of 2021 are summarised below and indicated the following:
Our team of business advisors, tax specialists and accountants are working with entrepreneurs active in a wide range of sectors, helping them to maximise their investment in their business. Please see our guide for further details of the services and advice we provide.
Capital Gains Tax rates for individuals are still favourable. Business Asset Disposal Relief (previously Entrepreneurs’ Relief) at 10% on the first £1m gain (subject to certain conditions) and 20% on anything over £1m. These rates are very attractive, and who knows what the chancellor will do in the next Budget? It’s possible these rates may not be around for long!
M&A. Recent research published by the Office of National Statistics and Experian Market IQ shows bullish UK M&A activity and it’s a trend which is keeping our team busy. We’re currently advising on a number of ongoing sales, and acquisitions.
Acquisitions. There is a lot of money flowing into private equity funds who in turn have the available cash for the for the right opportunities.
Mergers. There is an appetite for consolidation of businesses in specific sectors. We’re seeing bigger and better funded start-ups buying out smaller, and possibly lesser funded, counterparts.
Inward investment. The UK is still as a great place to do business and we’re seeing a lot of inward investment activity into the UK – most notably from China, USA, Australia and India.
M&A, ESG and the Race to Zero. M&A is active. An important development is that as part of due diligence potential acquirers are asking businesses about their plans to become ‘greener’. This used to be a question for larger businesses, but is now a consideration in the SME space. At COP26 the UK legally committed to a net-zero emissions target by 2050 and over half of the UK’s largest businesses have signed up to the United Nations Race to Zero Campaign.
Not all acquirers will expect every target business to evidence it can be net zero, it is however expected that every business has some form of plan in place. Whilst having a sustainability policy alone will not help you sell your business (there are of course many factors), responsible businesses are thinking about the role they can play in getting the world to net-zero carbon and are formulating their plans.
Income tax relief and the EIS approved knowledge-intensive fund
The government has allowed the introduction of an ‘approved knowledge-intensive’ fund that will:
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