Sale of Property Tax Consultancy
The Company
In the final quarter of 2020, Hornblower Business Brokers engaged the mandate to sell a niche Property Tax Consultancy. The company was advantageously positioned as highly profitable, with proven means of lead generation and a growing reputation for delivering a highly specialised service to an expanding portfolio of residential and commercial clients.
Since its founding as a lifestyle business in 2017, the company had established itself as a niche tax specialist, supporting its clients to attain a swift and efficient solution with expertise, through the often-complicated regulatory structure governing UK property tax. The company benefitted from deep expertise in supporting its clients with reclaims on overpaid stamp duty to attain a swift and efficient solution. The reclaims, made retrospectively, often amounted to many thousands of pounds.
The company’s success was built on a tried and tested means of lead generation which had in turn, generated a healthy client pipeline. The company also enjoyed high gross profit levels, with an average figure of 98%.
The company benefitted from low operational costs, without the need to own or formally lease any premises and a lean operational structure with the staff working remotely from their homes. Leading with high levels of client service and clearly positioned for growth, this business presented an attractive opportunity for a potential acquirer to develop and expand upon.
The Situation
The business first went on the market October 2020 with the aim of a swift sale to facilitate the 2 Directors exiting the business in order to focus their priorities on a combination of family issues and other business interests. At the same time, there was an imperative to complete the sale before the Budget on 4th March when it was widely expected that the Chancellor would bring in restrictions on, or even remove the benefit of Entrepreneurs Relief on the Capital Gain Tax charged on the sale of a company.
Due to the pandemic, a dip in activity during the second quarter of 2020 had a direct impact on revenues, which typically amounted to £50k a month. Despite the business experiencing lower monthly revenues as a result of the impact of the Covid-19 pandemic, the owners were able to apply an optimistic outlook as the business entered Q4 and began to see a strong uptick in demand. As the business rallied, the Directors anticipated a return to revenues of c.£50K per month, by early 2021.
Having sold a number of accountancy, tax reclaim and professional services firms, Hornblower was well placed for the sale with a ready-made list of buyers and investors focused on this niche area of property tax. Within 2 months, we handled over 45 enquiries and secured 3 compelling and competitive offers.
The successful match of vendor and buyer proved effective, with both parties quickly establishing a good working rapport and the buyer was able to move swiftly to complete the deal within both deadlines, Budget day and the arrival of a new member of the family.
As it turns out, the spectre of the removal of Entrepreneurs Relief seems to have been put on hold for the foreseeable future. With entrepreneurial and SME businesses being seen as one of the key drivers of the economy and innovation post pandemic, our belief is that business owners can be fairly confident that Entrepreneurs Relief or an equivalent incentive will remain in place for some time.
The Outcome
This particular deal stands out as a record achievement for Hornblower, carried out over a period of 4 months from launch to sale completion. The sale was launched on 21st of October 2020 and completed on the 26th of February 2021.
The deal was accelerated in no small part by the requirement to focus on securing Entrepreneurs’ Relief at 10%, which was paramount for the vendor to make selling a viable option. With the budget in September/October 2020 presenting a similar focus, it was imperative for Hornblower to start the process as soon as possible and focus our energies on securing a swift and timely acquisition.
Heads of terms were signed in January 2021 and the deal completed at the end of February 2021. The deal was managed by our London based Business Sales & Acquisitions Consultant, Sian Murray. Sian manages business sales for Hornblower across London and the South East UK.
SOLD February 2021
