Mergers and acquisitions brokers are using last week’s election result and the possibility of market volatility to woo advisers into selling their businesses.
Two approaches from M&A middlemen to advisers in recent days seen by Money Marketing have urged advisers to consider selling their businesses before either tax breaks are eliminated or markets move.
A circular from acquisitions broker Capital and Trust reads: “If a new government is voted in (in the coming months after last week’s election left the country politically paralysed) then anything other than a Conservative government will likely see Entrepreneurs Relief abolished.
“Not meaning to scare monger, just stating the obvious.”
Chief executive Patrick Isaacs tells Money Marketing: “I genuinely believe it…. Every year that goes by there’s an element that Entrepreneur’s Relief might be in jeopardy, even with a Conservative, pro-business Government.”
Entrepreneur’s relief reduces the amount of capital gains tax paid when all or part of a firm is sold under certain conditions, with sellers paying 10 per cent on all gains on qualifying assets instead of a higher rate.
Another approach from consultancy Berkeley Cannon, signed by chief executive Tony Fox, warns advisers that now might be the peak time to sell before a market crash could hit.
“How many people do you know that were making excellent profits and doing very well, delayed selling and then missed their opportunity? Putting them back decades?
“I think the markets are littered with them, from recruitment companies, to Dot Com businesses, to banks [and] mobile manufacturers. And I am certain within the IFA space many firms also break down before they realise their true worth, mass staff exits, compliance issues etc.
“Personally, I think IFA businesses are more resilient than most, and more so now with the built in recurring income element people have built up but no business is immune to market crashes.”