With the outlook for the UK economy looking extremely positive, 2017 is the perfect environment to sell your business. As in the housing market business owners, like property investors, should look to sell at the height of the market as the valuation of their business is at its maximum.
At Intelligent Business Transfer we have seen the sale value of businesses increase by 4.8% in the past year. The healthy selling climate looks set to continue with the experts predicting that the UK will be the fastest growing advanced economy in 2017.
Here are the five main reasons to sell in 2017:
1. Entrepreneur relief tax, for now
At the moment business owners can claim entrepreneur’s relief when selling all or part of their business, with owners paying just 10% capital gains tax. This is instead of the normal rate of 18% or 28%, therefore representing a huge saving when you’re looking to maximise the return on your effort.
However numerous reports have predicted that the next government could scrap the tax break after the 2015 election.
2. Low interest rates, for now
With UK interest rates holding at an all time low of 0.5% by the Bank of England at the start of 2017, buyer’s access to affordable finance is at an all time low as well. The market is currently flooded with buyers looking to take advantage of the accessibility to finance.
At the same time consumer spending has grown at its strongest rate in four years to boost consumption. So the economy is on the rise with access to buyer finance at an all time high – the perfect recipe for a seller’s market.
Interest rates are expected to rise considerably in the next 12 months. The more expensive it is for buyers to take out a loan on buying a business, the less likely you are to achieve your maximum business valuation.
3. More buyers in the market = increased sale valuation
With access to finance remaining at all time high, this ensures that there are more buyers in the market. This in turn will push up the valuation of your business, as there is simply more demand for successful businesses.
While small business owners may struggle to access finance to grow their own business, banks always look more favourably upon loans for business acquisitions. Banks consider loans for acquisitions as a more secure investment due to the trading history of your business. Between 50% and 60% of all business buyers borrow money from a bank to finance the purchase of a business.
4. More corporate buyers looking to acquire prime high street locations
At Intelligent Business Transfer we have also witnessed the rise in the number of corporations looking to acquire smaller businesses. As competition for prime retail locations increased, especially in the convenience and licensed industries, more corporations are looking to expand their portfolio by acquiring small businesses. The access to finance at low interest rates also increases the amount of money that these types of businesses can access for acquisitions.
5. You’ve survived hard times & profited
If you’ve been operating for at least three years, you will have successfully navigated and survived the recession years, which proved to be some of the hardest years small businesses have seen in the UK. Many business owners will see this is a massive plus and the right buyer will be able to see the opportunity that your business will provide in a growing economy.
How to capitalise on the favourable selling conditions
With the majority of business transfers taking anywhere from 3 to 12 months, now is the perfect time to get your business on the market and capitalise on the availability of buyer capital. Book your free business valuation, find out more details on selling a business or call our office on 0800 987 0813.