Autumn Statement cancelled: What does it mean for entrepreneurs and the M&A market?
With any potential tax changes paused until 2021, the M&A market is set to remain lively.
Before the Chancellor’s recent announcement that he was cancelling his Autumn Statement, there was much media speculation that Capital Gains Tax would be increased, to recover some of the financial costs of the Covid-19 pandemic.
As Ben Woods recently wrote in The Telegraph, rumours of a CGT hike have led to accountancy firm KPMG receiving a flurry of enquires from owner-managed businesses.
At Rockworth, we are hearing from the market that M&A activity is picking up. Companies that shelved their sale plans at the start of the pandemic are now trying to initiate transactions, either to extract cash or refinance the business.
The prospect of an increase in Capital Gains Tax next Spring creates a sense that there is a window of opportunity to sell shares more efficiently. And that is encouraging business owners to bring their sale 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.