- Business
- Exit, Sale or Succession
The recent Budget had major implications for business owners looking to exit in the near future, but it’s not all bad news, and it could be the ideal time to focus on growth.
At a glance
- The recent Budget had big implications for business owners, particularly for those looking to sell in the near future
- Businesses valued at under £1million still have the opportunity to investigate selling before April 2025
- This could be a golden opportunity for some businesses to focus on growth.
The much-anticipated Budget has landed, and with it, a series of changes that have business owners assessing their next move. Minimum wage rises, National Insurance contribution changes, and shifts in Capital Gains Tax all add up to a worrying time for business owners. If you’re an SME owner, you may find yourself mulling over the punk rock band, The Clash’s eternal question: Should I stay, or should I go now?
We unpack some of the key decisions business owners may want to consider in light of these changes—whether you're contemplating an exit or looking to double down on growth.
Should I go?
“If you’re contemplating an exit, my guidance is straightforward” says Richard Murray, Chief Commercial Officer at Elephants Child: “if selling is in your near-term plans, consider doing it now.”
What’s changed?
1. For trading businesses valued at £1 million or under: No immediate tax increase has been levied yet. However, from April 2025, you will be looking at a rise in Capital Gains Tax from 10% to 14%, significantly impacting your post-sale earnings.
2. For businesses valued above £1 million: An increase from 20% to 24% on CGT is already in effect on proceeds about this threshold, with the possibility of an additional £40,000 tax bill on the first million if you delay past April 2025. For many, it’s too late, but the looming April increase can add another layer of urgency.
Is Selling Now Realistic? Richard stresses that: “The reality is, for businesses worth over £1 million, the due diligence process and market timing make a successful sale before April unlikely. Smaller businesses might fare better with quicker transactions, but there’s no guarantee.”
Possible alternatives?
A management buy-out (MBO). MBOs often sidestep the lengthy due diligence process, as buyer and seller already share a working relationship. An MBO could be the fastest route if you're keen to conclude a deal before tax changes bite in April. However, Richard states that the time pressure will be high—"expect a rush of similar transactions in March, so getting ahead is essential”.
And for those contemplating an Employee Ownership Trust (EOT) as an alternative exit strategy, note that the Budget included tweaks to the regulations around EOTs, which could impact the success and feasibility of this option.
Should I stay?
If the prospect of higher taxes makes selling less appealing, many owners may decide to hold steady and ride out the changes. However, “staying” does not mean “stagnating.” Some business owners will likely batten down the hatches, waiting and hoping for more favourable conditions or a change in Government policy. Others may shift gears, reducing their involvement and working fewer hours while continuing to collect dividends.
But as Richard explains, there’s an upside: “this could be a golden opportunity for those willing to lean in and focus on growth. With some competitors opting for a holding pattern, businesses with a clear plan for growth will thrive, capturing market share and increasing their valuation. Instead of letting the tail (tax rates) wag the dog, driven owners can focus on what they can control: scaling, innovating, and building value.”
Take control of what you can
Tax rates will fluctuate, and policy changes are inevitable. What you can control, however, is how you approach your next steps for your business. The choice to sell, grow, or pause ultimately depends on your unique circumstances and your personal goals.
If the numbers tell you that selling now will support your long-term retirement or financial goals, then act on it. But if you’re not quite there yet, don’t feel pressured by tax changes to make a premature exit.
The more important thing is having a robust strategy that aligns with your decision. An intentional exit or growth plan, executed thoughtfully, can add substantial value to your business—often well beyond the impact of changing capital gains tax rates. The best course is to keep your focus on the big picture and control what’s within reach.
We're here to help
If you’d like a second opinion on your next steps, or if anything here has struck a chord, please feel free to reach out. We’re here to help you navigate your options with confidence. Get in touch today.
We work in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, who have been carefully selected by St. James's Place. The services provided by these specialists are separate and distinct to the services carried out by St. James's Place and include advice on how to grow your business and prepare your business for sale and exit.
Where the opinions of Elephants Child are offered, these may not necessarily reflect those of St. James's Place.
The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.
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