As we turn the page into another year, The Corporate Finance Network has been collating the experiences of corporate finance advisers in the owner-managed business sector and sharing views on what the market is likely to bring in 2024.
As a member firm of The CFN, we contributed to this report and are pleased to share some highlights with you.
Key findings include:
- OMB sellers need to be more prepared for sale, so they shine out in a competitive market
- Buyers are increasingly nervous of higher funding costs so the deal structure needs to accommodate this
- The political uncertainty will have some impact next year, but sensible transactions will still complete
53.3% of advisers thought it was a buyer’s market – good news for those companies with potential ‘buy and build’ strategies!
Due diligence is taking longer as purchasers are making sure that the risks are known and can be minimised as much as possible.
26.7% of advisers mentioned unrealistic expectations of deal valuation from vendors, so understanding the drivers for increasing market value is a key part of exit planning for any business owners looking to sell in the next few years.
Tech, software, AI, ecommerce, telecoms, professional services and insurance were all sectors where consolidation activity was high. However, many advisers commented that they expected further sectors would experience an increase in deal activity. They are seeing clients become increasingly tired of running their business and buyers who are looking for growth and steady income.
Mark Bramall at Dyke Yaxley commented
“With this report showing that due to next year’s general election, advisers believe that 46.7% and 33% of buyers would become more nervous about deals from Q1 and Q3 respectively, business owners who are looking to exit need to ensure they stand out in the market.”
“With this report showing that due to next year’s general election, advisers believe that 46.7% and 33% of buyers would become more nervous about deals from Q1 and Q3 respectively, business owners who are looking to exit need to ensure they stand out in the market.”
Chairman of The Corporate Finance Network, Kirsty McGregor, said
“Exit planning includes working a business to increase its value and also find the best time to sell. This applies to the lifecycle of the individual company, but also being in the right place at the right time when consolidation activity increases.
“Tax policies are unlikely to move adversely during 2024, but 2025 is less certain. Business owners who want to take advantage of current rates and reliefs should make decisions soon.”
For more information about the Exit Planning Services we can offer, please contact Sarah Hartshorn, Business Advisory Specialist.