Overexposure to venture capital trusts and enterprise investment schemes could potentially put off buyers when advisers try to sell their businesses, chief executive of Capital and Trust Patrick Isaacs warns.
Speaking yesterday at Money Marketing Interactive, Isaacs says advisers looking to sell their firms could hit problems if their clients are reliant on VCTs and EISs.
He says: “Overreliance by firms on VCTs and EISs as tax efficient vehicles is a potential red flag to buyers and could scare them off.
“There are lower risk alternatives to VCT and EIS solutions. I know they are appropriate for clients in certain situations so you would factor them into the offering.
“It won’t have a positive effect on the sale of the firm, but will it have a negative effect? It depends on volume and make up of the VCT and EIS product clients are investing in.”
VCTs are becoming increasingly popular, with funding jumping by more than a third in the past year.
According to the Association of Investment Companies, the amount raised by the sector went up 34 per cent to £728m in the 2017/18 tax year – the second highest figure since 2006.