Will Brexit affect the sale of your business?

Category: Global M&A news | Helpful tips for SME's | Preparing to sell a business

Thu 28th July 2016

It is now over a month since the Brexit vote and we have seen many changes in the political landscape. However, on the ground in the world of selling owner managed businesses, there seems to be little impact so far. Despite the usual slowdown in activity over the summer, we continue to receive a good level of enquiries from prospective buyers of our clients’ businesses.

We believe that this is fundamentally because good businesses always sell well. Businesses operating in attractive market sectors, well run with management in place and with an attractive client base will always attract interest from investors in SME businesses. Moreover, for international buyers, the weaker pound makes investing in the UK all the more attractive, and we have seen a steady increase in enquiries from overseas buyers during the last few years.

Over the next few years, much will depend on the outcome of the UK’s negotiation with Brussels and their effect on the UK and wider economy. If the economy falters and company results dip, this may have an impact on valuations and/or deal structures, but with the increase in GDP of 0.6% in the month since the vote published this week, there is reason to be positive about the outlook. Indeed, many business owners and investors will be looking to build the result of the referendum into a time of opportunity.

Business acquisitions offer a reliable means of value creation by exploiting synergies, increasing market share, accelerating growth and extracting benefits from financial and operational restructuring. The UK’ s merger and acquisition market is one of the most dynamic worldwide with significant activity in both domestic and cross border deals. The referendum result is unlikely to change these fundamentals.

With a fair wind, the UK will redefine trade agreements confirming its predominant role as main hub for deal-making as a world-leading place to do business. EU membership is not the sole factor affecting businesses’ decision to invest in the UK. The UK ‘s stable financial, regulatory and legal system in addition to the appealing corporate tax law rates contribute to this and are not likely to change post-Brexit.

So will Brexit affect the sale of your business? In the short term probably not. In the medium/long term, the key factor remains dependent on the attractiveness of your business to investors and its continued financial performance. Good businesses always sell well.