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Exiting your business

Matteo Timpani, Partner, Corporate Finance
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With crisis comes opportunities

Family business owners and entrepreneurs often wait for the ‘perfect’ time to exit their business. Often, they are waiting for family, personal, economic and market stars to align before making decisions about retirement or succession.

What events of the last five years have taught us is that whether driven by Brexit, a global pandemic or political conflict, the ‘perfect’ time may well be a mythical concept and something that may never come. Indeed, the ‘new normal’ seems to have evolved into a state of affairs where some level of uncertainty is a constant, and the ability of a business to manage and even grow and prosper through it, is a valuable trait.

Media sentiment towards the various challenges the economy has faced in recent years has, understandably, been cautious and often a rather miserable read. The uncertainty of the impact of Brexit was compounded by the devastating economic effects of the COVID-19 pandemic and all the restrictions that came with it. Just as we start to emerge from these restrictions and long-established businesses begin to see recovery, a conflict 2,000 miles away has ramifications across commodities and supply chains, throwing a new set of challenges at UK businesses trying to emerge from the most challenging period many will have ever faced.

One might think that all these adversities would have supressed the UK market for Mergers and Acquisitions (M&A), making capital more cautious, lowering valuations and people’s appetite to do deals. The truth appears to be quite the opposite. We are not just seeing the green shoots of recovery in the UK M&A market or a silver lining on dark economic clouds. Instead, 2022 looks to be following in the footsteps of 2021. M&A activity, the mechanism for which many business owners will ultimately generate significant wealth for their families, continues to thrive and the market seems to be booming.

UK businesses remain attractive investments for both UK investors and strategic acquirers. The appetite from overseas capital to invest in the UK also persists. As a result, the market continues to see heavy competition for quality assets – well run growing businesses, and valuations continue to remain high. Investors and buyers are certainly aware of the impact recent events have had on the performance of some businesses. They have been quick to learn to factor this into their assessment of the long-term prospects and ultimate value of the business. Deal structures are evolving to enable some element of risk to be mitigated on the part of buyers (the increasing use of earn-outs or other forms of consideration contingent on future performance), but there remains value and well-advised business owners are still able to plan to exit their business over a relatively short period of time and secure their financial future.

Will UK businesses continue to feel the effects of Brexit, COVID-19 and the conflict in Ukraine? Absolutely. But UK industry is resilient and has learned to exist and adapt along with the various challenges that are presented.

The timing may not be ‘perfect’. It rarely is. Embarking on a process to exit one’s business can be a long journey; one requiring significant planning, preparation and work to maximise the chances of a successful and potentially lucrative outcome. If you have aspirations of exiting your business, and your expectations are reasonable, then it would appear now is as good a time as any to consider your options.

If you are looking for an exit strategy or simply want to discuss the choices available, please speak to your usual Crowe contact or to one of our Corporate Finance professionals who will be pleased to talk at any time.

Contact us

Rebecca Durrant
Rebecca Durrant
National Head of Private Clients, Manchester