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M&A Market Update March 2024

In this video, Justin Levine, MD of TheNonExec Limited, and Nick Davies, Partner and M&A Solicitor at Steele Raymond LLP, discuss the current state of the M&A market (March 2024).

The M&A Professionals note that reported deal reported deal volumes are lower in the SME space, according to industry data. However, both firms are experiencing a busy time with lots of work coming their way. They mention that there is political uncertainty in the UK due to an upcoming general election, and potential changes in capital tax rates could impact M&A activity. Despite these factors, they both agree that it is a good time to consider selling a business, as there is still strong buyer appetite and international interest in UK assets. They also discuss the potential impact of higher capital gains taxes and mention alternative exit routes such as employee ownership trusts.

Overall, they conclude that it is business as usual in the M&A market, with no significant turbulence at the moment (March 2024).

To chat to one of the team about the current market and/or your potential company sale contact us now.

Quick find timeline:

00:00 – Intro markets confab for M&A mid-March 2024
00:17 – Market Data Experian, Market IQ & other volume data
00:49 – Affect of interest rates on higher level deals
01:10 – Change in government could affect capital gains tax
02:24 – Impact at top end of market £100M+
02:50 – SME sector still tremendous buyer appetite
04:43 – Where international interest in UK companies is high
04:56 – UK PLC attractive to foreign buyers
05:33 – Alternative Exit routes

Meet your M&A experts

Nick Davies, Partner | M&A Solicitor, Steele Raymond LLP Solicitors
Nick acts for a wide range of business clients across various sectors, advising on complex corporate transactions including company sales, purchases and mergers. Nick also advises on on mergers, de-mergers and re-organisation.

Justin Levine – Managing Director, TheNonExec Limited M&A Boutique
Justin leads a boutique exit advisory firm specialising in manufacturing, technology, IT, digital, healthcare, wholesale and distribution markets. With the support of a 15-strong virtual team of analysts and researchers, he helps private business owners with growth and exit strategies.


Steele Raymond LLP
Richmond Point, 43 Richmond Hill, Bournemouth, BH2 6LR

TheNonExec Limited
Contact us here to chat about your business exit.

Transcript – M&A Market Update March 2024

Justin Levine, MD, TheNonExec Limited:

So Nick, let’s just have a quick confab about markets. Markets as in what’s the market looking like for M&A transactions for people, sellers of companies, thinking that they’re going to take their business to market. We are mid-March 2024. Is it a good time?

Nick Davies, M&A Solicitor, Steele Raymond LLP:

Yes, it’s an interesting time, I think. There’s lots of data available these days. You can look at Experian, Market IQ. There are other sources of M&A deal volume data. The message seems to be that deal volumes are lower in the SME space. We’re having a busy time of it as a firm. We’re finding that there’s lots of work finding its way to us, which is great. I think as well, there has been some uncertainty in the market. I mentioned in another video, at the much higher level, buyers who are raising significant debt are finding that process to be a little bit slower, related to interest rates perhaps. We’ve obviously still got, and we always seem to have, quite a lot of political uncertainty in this country. We know we’ve got a general election at some point this year. I think maybe November is being touted for that.

What will that mean? Labor have, at times, suggested that they would like to align capital tax rates with income tax rates. There’s not much left to take away, in my opinion, on CGT. We’ve seen entrepreneurs’ relief, business asset disposal relief, or BADR come right down now. It used to be £10M, we’re down to £1M at 10%, so it doesn’t feel like there’s much left to take there. That said, politicians can often find a way, so we might see a bit of an increase in activity as we get nearer to the election. That’s quite often the case. People get a bit nervous that, oh gosh, the rates could materially change or be materially worse off and often want to sell before then, so that could be coming. But other than that, we are finding it to be a busy time. What’s your experience been? Busy for you?

Justin Levine, MD, TheNonExec Limited:

The answer is yes. We are exceptionally busy. We’re a small micro boutique, if you like, so we handle two to three deals every year. We are double that at the moment. We have a waiting list and we are surprised that we even got to the point where we have a waiting list, but we do and I think we talked earlier, we have turned away 30 opportunities in the past 12 months alone. So it’s a remarkable number. So yes, we are busy.

I would mirror what you’re saying. Basically at the top end of the market, £100M transactions plus have no doubt being impacted. Interest rates have really taken off the table a lot of deals. Why? Because people selling transactions at that level, buyers are having to leverage the deal. They have to raise money.

Nick Davies, M&A Solicitor, Steele Raymond LLP:

You’ve got to price it into the deal, the interest costs and everything else.

Justin Levine, MD, TheNonExec Limited:

That’s right. So very simply, it’s slowed the deals down in the large cap, large capitalised sector. In the SME sector, lower mid cap as we call it, honestly, we’re not seeing that. The deal volumes technically are down in terms of if you look at the data, but actually what we are seeing in the market, speaking to yourself and speaking to others and reading the market data, is there’s still tremendous buyer appetite. So nothing has really changed. So in terms of timing an exit right now, it’s as good as it’s ever been.

Now, I would say business asset disposal relief, capital gains taxes, that potentially is a game changer. It’s looking like a labor government’s going to come in, so I don’t want to call it, I’m not great at forecasting it, but the stats seem to support that. So they have supported higher capital gains taxes.
So if they do equalise those with income tax rates, that, I think, would be a game changer because a lot of selling private business owners are going to think twice if they’re paying, instead of paying a blended 10 to 20% exit rate on their proceeds and they’re paying 35 to 45% rates, boy is it going to make them think twice. It won’t stop everybody.

I think what we’re seeing in this country is there is a wave of older people, 50 to 75, 80, I’m in that range myself, that own companies, that don’t have any succession planning in the business, that need to find an exit for the business. They don’t want to close it, they’re good businesses to sell.

So you’ve got a number of factors in play at the moment. You’ve got this wave of companies coming to market. You’ve got reasonably good times at the moment.

Yes, there’s stuff happening in the politics out there. There always will be.

Nick Davies, M&A Solicitor, Steele Raymond LLP:

Yeah, that’s right.

Justin Levine, MD, TheNonExec Limited:

But what could be the game changers? Tax could be a game changer. And of course the big political events that hopefully won’t happen that could change planet Earth as much as what’s happening in the M&A industry. Hopefully those don’t happen. But at the moment, honestly said, from my side, it’s business as usual. We’re seeing no turbulence whatsoever, and we’re seeing a lot of international interest. Scandinavian companies, Northern European, Western European, Northern American, Canadian, people are still interested, really interested in buying UK assets.

Nick Davies, M&A Solicitor, Steele Raymond LLP:

UK PLC is and has been attractive to foreign buyers for many, many years. Our experience is the same as yours. We’ve got lots of foreign buyers at the moment. They’re a good source of selling your business. You need a CF advisor, M&A advisor who can help find those global buyers. But yeah, certainly like you, we’re not seeing a shortage of appetite, which is good.

Tax rates, you are right, is absolutely the, what’s the phrase? The tail that wags the dog or something. And that could be the big change coming. It’s a topic for another day, but we could talk about other exit routes. There are opportunities under some sales to employee ownership trusts, which can currently be CGT free, no tax at all. That’s under some consultation so it could change. But there may be opportunities for people who want to exit, don’t want to incur the tax to do things like that. But I agree with you. I think if I were a seller and I were faced with CGT at income rates, I think long and hard about what do I want to do and how I might else structure my continued ownership to keep things going.

Anyway, we could talk for hours on this sort of stuff, but thanks so much for your time today. Yeah, likewise. We’ll speak again. Cool. Thanks Justin.

Justin Levine, MD, TheNonExec Limited:


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