Holly Threlfall.
Holly Threlfall, partner and head of corporate & commercial at Wilson Browne Solicitors, assesses the answer as she looks at how the recent Autumn Statement might affect the thinking of those looking to sell their business.
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WE THINK it might be but there is no simple answer to this as it depends on where you are in your own business lifecycle, what you have planned (if anything) in terms of an exit strategy and a number of other factors.
However, the recent budget has thrown the issue of exit into sharp focus.
The much-anticipated Autumn budget certainly made its mark on the year. Politics aside, for anyone looking to buy or sell a company in the foreseeable future there are some crucial changes which need to be taken into account.
The most obvious change is the increase in gains on shares to 24%. This came into effect immediately and needs to be taken into consideration when planning your exit and what you will receive net of tax following your sale.
This is by no means a small increase and will certainly have an impact on vendors.
Although Business Asset Disposal Relief is not changing immediately, there is going to be an increase from 10% to 14% come April 2025 and again to 18% in April 2026.
This means that the gains paid on the first £1 million of (lifetime) disposals after April 2025 will be taxed at 14% instead of 10%. This could mean paying up to an additional £40,000.00 in tax if you sell after April 25 or up to £80,000.00 additional tax if you sell after April 2026.
Adjustments to employers National Insurance is going to significantly impact the profitability of businesses. Buyers will need to update their forecasts and this could significantly impact the purchase price and any earn-out agreed.
It goes without saying that these are just a few of the core announcements which will impact deals in the foreseeable. There will certainly be others which will impact cash flows, profitability and, ultimately, deal appetite for both buyers and sellers.
Most of the time you do not know what is coming. In this instance, we now know about upcoming changes. If you are thinking of selling in the near future, you may want to plan for your sale sooner rather than later – most corporate sales take eight to ten weeks to complete from agreement of heads and even longer if you need to go to market.
If you want to know more about selling your company, and succession planning, now is as good a time as any to find out.
Download our guide at www.wilsonbrowne.co.uk/guide-to-selling-a-business or scan the QR code here.
For a confidential, no-obligation discussion, contact Wilson Browne’s Corporate & Commercial team on 0800 088 6004.
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