The Next 6 Months Post-Budget for M&A Activity

Following months of speculation, rumours and uncertainty, the Chancellor delivered her budget at the end of last month. Now the dust has settled a little, we have been looking at what the potential impact might be on M&A activity over the next 6 months or so.

Business Asset Disposal Relief (BADR) Increases

There was a lot of speculation about Capital Gains Tax increases and the impact on Business Asset Disposal Relief (formerly known as Entrepreneurs Relief). As the effective rate of the relief is increasing from 10% to 14% on 6 April 2025, business owners who were considering a sale might be more inclined to accelerate the process to lock the CGT liability at a lower rate.

This will inevitably lead to a rush of transactions needing to take place before 5 April 2025, so if you are considering a sale, it is best to start the process now, there’s still time but it is going to be tight.

Partial Exits

Some business owners who are not yet ready to completely sell their business, but have a management team in place, might consider a partial exit where they sell some of their stake in the company to the managers. This allows them to make their BADR claim on some of the value they have built up over the years, whilst still having some involvement in the business and also allowing the management team to take the reins, with a view to a full exit in the future.

Other Exit Routes

For other business owners they might look more seriously at Employee Ownership. This option allows the business to retain its ethos, culture and identity whilst also being for the benefit of the employees as a whole. The business owners receive the consideration for their shares over a period of time and can remain involved in the business (to an extent) throughout the period and afterwards.

BHW Solicitors made the transition to Employee Ownership in 2022 and has helped many businesses do the same.

If you are a business owner who is considering their options for the future or would like to discuss a potential exit, please contact our Corporate and Commercial Team on 0116 289 7000.