Deals Surge
Insights by Peter Watson.
Recent BDO data indicated that nearly 1,000 deals closed in the UK in the last quarter across all sectors, a rise of over 70% from the previous quarter.
This is driven, we understand, by the forthcoming increases in Capital Gains Tax (CGT) announced in the last budget! Our own analysis of M&A data* specifically relating to the Information and Communication Technology (ICT) sector shows a much less marked rise of 15% but nonetheless supports a general surge in dealmaking.
The CGT changes do still encourage smaller deals to complete before 5th April 2025 and 2026 but the benefits may well be outweighed by business performance. Timing your exit is always high up on the agenda for business owners but once again, we would warn of ‘letting the tax tail wag the investment dog’.
Market activity is certainly one criteria, but personal timing and business timing are also critical. Whilst getting all three in alignment is ideal, this cannot always be achieved. If the personal timing is right, and either you have a receptive market or the business performance is good, then it is possible to make a successful exit. Waiting for all three to align is a bit like “timing the market” in investment terms – not to be recommended!
In increasingly uncertain geopolitical times, you can be excused for not necessarily knowing which way to turn. Here at Prism, we don’t pretend to have all the answers to those global issues, but we do pride ourselves at being able to make reasoned assessments of Tech businesses and to advise on exit strategies. And yes, that does include timing. If you are considering your path to an exit, then do call us for a confidential, no obligations chat – or book an appointment with one of our directors: www.prismcorporatebroking.com/1-to-1-chat
At the beginning of each year we run a survey for owner-managers of software and IT services businesses. If you haven’t already completed it, please do take a couple of minutes to answer a few questions about your business’s performance and M&A plans. The survey is anonymous and we will publish the results in our next M&A report due out in April. Please take the survey here: https://s.surveyplanet.com/5scxrrmc
* Source: Moody’s M&A analytics Orbis database