Hardly a minute passes by without the unmistakable sound of the B word. Much has been said about its impact and the various outcomes of a deal or ‘no deal’ but little has been said about how this may affect the market place for buying and selling businesses.
In this article, Avondale Chairman Kevin Uphill shares his view of the potential implications of BREXIT based on his 27 years of experience in the sector.
“In the last ten years the UK economy has grown more slowly than any other time in the last fifty. This has been very good for business sales and M&A volumes as buyers seek transactions to drive growth, secure new customers, create shareholder value and drive their business model via acquisitions.
Business sales for many sellers are driven by a lack of internal succession. The good news has been for them that slow growth has meant more trade buyers are on the scene. Add to this abundant capital as yields are poor in both organic growth and other investments and you have a very active buyer and seller market.
Brexit is a symptom of slow growth as much as it is a cause. Even if a ‘no deal’ scenario occurs where forecasts are for a significant dip in UK plc’s GDP, the prognosis is this is short term. It won’t alter that business sales are occurring due to lack of succession, abundant capital, slow growth and the need for buyers to strategically shift their business models. In or out of Europe globalisation and the UK as trading nation that does business will continue. This means international deals will also remain favoured.
Whilst more people in business voted ‘remain’, I know that they also subscribe to the theory that a decision implemented well is far better than indecision. Whilst we disagree exactly on how we withdraw many do understand why. For this reason the most likely outcome is we do secure a practical withdrawal from the EU in the coming months. If this is the case, business sales, acquisitions and mergers will be even more critical to drive business growth and valuable businesses in a truly global market place.
It’s an exciting and interesting time in the sector.”