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How will the Autumn Budget Impact Business Owners on the sale of their Business?

Many Business Owners will be anxious about the forthcoming October Budget as it is rumoured that the Chancellor is proposing change to the current reliefs offered to sellers by the Business Assets Disposal Relief allowances.

There is a risk that the Chancellor will reduce the tax relief available to Sellers on the sale of a business. In this article we offer a view on how possible changes might affect businesses and the steps that can be taken to prepare for a smoother sale.

Impact of Changes to Business Assets Disposal Relief

Any changes or reduction in the current reliefs available will have a significant impact on Sellers,  by way of example:

1. Higher tax liabilities for sellers: This will invariably result in reduced net proceeds from the sale. Pre-budget, there is no certainty as to when any change will take effect and for those considering sale time is of the essence. There are some keys steps owners should take now to prevent delays further down the line.

2. Increased Complexity: New regulations often introduce complexity, requiring businesses to navigate additional paperwork and compliance measures. This can delay the sale process and increase costs associated with legal and financial advice.

3. Valuation and Pricing: Changes in tax laws can affect how businesses are valued. If the tax benefits are reduced, the overall valuation of the business might decrease, impacting the sale price.

Steps to Prepare for a Quick and Easy Sale

1. Understand the Value of Your Business

Before listing or entering into negotiations for the sale of your business, it is essential to have an accurate valuation. Consult an independent business valuation expert to determine the worth of your business which would cover all assets of the business including properties. This will help you set a realistic sale price and identify areas for improvement which could result in increased profitability thus leading to a more marketable business.

2. Define Your Objectives

Clearly define what you hope to achieve from the sale. Whether it is maximising the sale price, ensuring the well-being of your staff, or completing the sale within a specific timeframe, having clear objectives will guide your strategy. Enlist your legal advisers to review all of the business activity and develop a comprehensive plan depending on the findings of the review.

3. Get Finances and Paperwork in Order

Ensure all operational financial statements, forecasts, balance sheets, accounts and cash flow statements are up-to-date and accurate. Work on dealing with any discrepancies and ambiguity, ensure that the finances are clear, transparent, and easy to follow and adopt, this will be very attractive to potential buyers as it will build trust with potential buyers and streamline the due diligence process. Once solicitors are instructed on the sale you can simply share the finances directly without the need for detailed interrogation and revisions.

4. Conduct Due Diligence Early

Engage with legal and financial advisors early in the process. Perform a thorough pre-sale due diligence exercise to identify and address any potential issues before they become deal-breakers. We work with key heads of departments namely Chief Executive Officers, Finance Directors, Chief Operating Officers and Human Resources Directors and external advisers to conduct a full 360° review of the Business consisting of: -

• a review of financial performance.

• review of legal contracts.

• a full review of the business real estate assets and co-ordinate with you to ensure compliance with statutory and regulatory requirements, collate, organise, and prepare the sharing of property documents, consider whether any third party consents are needed and ensure all discrepancies in the property paperwork is regularised.

5. Enhance the Value of Your Business

Identify areas where you can enhance the value of your business. This might include investing in new equipment, strengthening supply chains, or providing additional staff training. These improvements can make your business more appealing to potential buyers.

6. Develop a Marketing Strategy

Create a compelling marketing strategy to attract the right buyers. This should include a detailed company profile, marketing documents, and confidentiality agreements. Partnering with professional business consultants can significantly increase the likelihood of a successful sale.

 7. Prepare for Handover

Ensure your business can operate smoothly without you. Develop a strong managerial team and roadmap how the company will continue to prosper under new ownership. This will be a significant selling point for potential buyers.

By following these steps, you can prepare your business for a quick and easy sale, even in the face of changing tax laws. Staying informed and proactive will help you maximise the value of your business and ensure a successful transaction.  We know that businesses struggle to keep their house in order in the midst of still working in the business, rather than on the business, so it is vital, to retain from the outset, the right legal advisers who are attuned to your desired outcomes and objectives with the track record and expertise to ensure that you achieve them.

Contact FG Solicitors today on 0808 172 93 22 or complete our quick contact form for a no obligation discussion!

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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.