With no potential changes to tax until his spring ’21 budget, this will further encourage entrepreneurs looking to mergers & acquisitions
Before the Chancellor’s recent announcement that he was cancelling his autumn statement, there was much media coverage that one measure he would take to recover some of the huge financial outlay during the Covid crisis would be to raise capital gains tax.
Indeed, Telegraph journalist Ben Woods wrote earlier this month that accountancy firm KPMG have started to receive more calls since rumours of a potential increase started.
Insight from our research
From our conversations across the industry, we are seeing firms who had put their sales plan on hold at the start of the pandemic, to now pick up discussions either to take cash from the business or investigate bank-funded refinancing quickly.
And with no tax rise now until at least spring 2021, this is another impetus that will support a growth in the merger and acquisition market. With shareholders recognising they may have to pay more tax from next year, they will want to bring any previous on-hold plans forward.
Whilst the extremely challenging times for SME owners are set to continue and any eventual further tax rise will come as a blow to owners who have already had a very difficult period during the Covid-crisis, the future of the M&A market is looking increasingly positive. And as ever, it will be entrepreneurs whose convictions and activity kick-start a broader economic recovery.
The encouraging news, as we mentioned in our article the 5 Drivers of M&A Activity, is that there is a broad array of finance and transaction options available on the market. Many investors and private equity firms who have been waiting to participate since before the Brexit divorce bill and the 2019 general election, do have funds available now together with a clear motivation to support and drive growth.
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