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New appetite for acquisitions

THE second half of 2013 definitely saw an improvement in the UK’s economy, markedly so in the final quarter of the year. 

We are starting to see a meaningful return of the mergers and acquisitions market so now is the time for owner-managed businesses in Northamptonshire with an improving balance sheet and an optimistic future, but with no obvious succession plan for its owner, to start planning.  In other words, there is an appetite out there to buy well-run profitable businesses and pay realistic prices.

THE second half of 2013 definitely saw an improvement in the UK’s economy, markedly so in the final quarter of the year. 

We are starting to see a meaningful return of the mergers and acquisitions market so now is the time for owner-managed businesses in Northamptonshire with an improving balance sheet and an optimistic future, but with no obvious succession plan for its owner, to start planning.  In other words, there is an appetite out there to buy well-run profitable businesses and pay realistic prices. Also, there is some bank funding available for acquirers.

We know that there are a lot of family and management owned companies where, had the economy not collapsed in 2008, the present owners would have exited.

The owners are still there, but the reasons for sale have not gone away and may even be more pressing (for example, just the simple desire to retire for a simpler life). Two factors, which are now back again, meant exit plans had to be put on hold.  These factors were a lack of confidence in the economy, and a lack of appetite and ability by the banks to lend for an acquisition.

The increasing confidence in the UK economy has meant that entrepreneurial businesses are looking to take advantage of opportunities by making an acquisition, and their bankers now have the appetite and ability to provide funding, including some cash flow funding. At Howes Percival, we have had a very busy last quarter to 2013, seeing some very good prices paid for businesses we have sold for clients.

So now is a good time to think about selling your business.  Buyers can see good opportunities for upside arising from the synergies of an acquisition, particularly where there is good reason to think that the economy will continue growing. There are still not that many good businesses for sale yet, meaning that those that take the plunge and look for a buyer are finding that they are in demand, setting up the ideal situation to find the right buyer at the best price achievable.

Any successful disposal of a business will take several months to achieve, so for an exit during 2014 now is the right time to start planning. A call to your usual professional advisor, to take professional advice, should be your first step.

For full details of these or any other employment law matters, contact Howes Percival on 01604 230400.

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