UK entrepreneurs have made £11.8bn from selling their businesses last year* shows research by Bowmore Asset Management.
That was 59% lower than the £29.1bn UK entrepreneurs made from selling their businesses in the previous year (2019/20). The fall in the amount of money that UK entrepreneurs made was partly due to the early part of the COVID pandemic causing a slump in M&A activity.
The economic slowdown of the pandemic meant entrepreneurs became more reluctant to sell at reduced valuations. Prospective buyers were also put off from buying UK businesses in the first six months of lockdown due to major uncertainty over the economic effects of the pandemic. In addition, lingering concerns over social distancing meant that due diligence, needed as part of the M&A deals, was harder to undertake.
Amount of money made by entrepreneurs selling their businesses – based on HMRC data on Entrepreneurs Relief/Business Asset Disposal Relief.
Mark Incledon, Chief Executive Officer of Bowmore Asset Management, said, “British entrepreneurs have had another good year for selling businesses, with billions of pounds more brought in.”
“Even during the extremely challenging economic conditions of the pandemic, UK entrepreneurs were able to generate significant amounts of money by exiting their businesses.”
Mark Incledon adds that entrepreneurs who have sold their businesses recently should be looking to invest these profits and maximise future returns.
Adds Mark: “The first order of business for entrepreneurs who have sold their companies should be reinvesting that money sensibly. Yields are now more generous, but inflation is eating away the value of savings at a far faster rate than normal.”
“However, valuations are depressed across a wide range of asset classes and those who invest wisely today stand a good chance of benefitting in the long term.”