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Selling a Business Post-Brexit

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By Jo Thornley, Head of Brand and Partnerships at BusinessesForSale.com

All business owners will of course be keeping a weather eye on the course of Brexit negotiations. 

But those who are planning to sell a business in the near future will find it particularly hard to ignore the twists and turns of the Brexit saga. 



So would selling your business in the present climate be the best of times, or the worst of times for you? Here’s a snapshot of informed opinion.

A new landscape

Though there was post-vote turbulence in the financial markets, and to some extent a state of flux remains, two major indicators seem to be suggesting the emergence of broad trends. 

The FTSE index has been trading very comfortably above its level in the aftermath of the 2016 referendum vote, and in mid-January 2018 the FTSE was even hitting record highs. 

Meanwhile, the pound which had dropped against the dollar once the Brexit result was announced has since clawed its way back – though not without some relapses along the way. 


According to BBC Financial Reports in January 2018 the pound has broken above $1.37 for the first time since the Brexit vote in June, 2016, when it stood at $1.47. 

How business owners react to these statistics will largely depend on their own sector perspective. 

Most FTSE-listed companies export their goods, so a weak pound improves their performance on paper, whilst small businesses trading exclusively in the UK domestic market have been relatively unaffected. 

Overall, many feel their cautious business-as-usual approach has been vindicated. 

Bagging a bargain

 
According to the New York Times, “the decline of the pound has created bargains” for some international buyers but has “also cast some deals into doubt”. 

Strategic acquisitions have fared best, though in some other instances adding sweeteners has been enough to seal the deal. For example, extending the handover period or offering seller finance can prompt further interest in a business for sale. 

For some sellers, this raises the possibility of lowering the price to secure a sale in a market where, without the added incentive of bagging a bargain, the default position of many potential purchasers may be to pull out while uncertainty remains. 


So if you definitely want to sell, a discounted deal could be the best way to achieve your aim. 

Fearful foreign buyers


If you hope to sell your business to foreign investors, professional business mentor and FSB member Philip de Lisle is in no doubt about your prospects:

"It’s very much a win-win situation, that’s why the market is so buoyant. It’s certainly not sinking."

He observes that, provided you’re UK-based and selling in GBP, achieving something like your asking price will not only leave you ‘no worse off’, but a deal secured under a weaker pound offers your buyer enhanced value for money.


So the takeaway point here for would-be vendors is that there is still plenty of business to be done by those who can see beyond the headlines, especially in regards to cross-border deals. 

Trade facilities


Entrepreneurs already engaged in European trade could also turn this feature to their advantage in any potential sale. A foreign buyer would see an existing EU trade outlet as an attractive option. 

This extra dimension would enable any prospective purchaser to hedge their bets in a situation where the shape of future EU trading arrangements is yet to be defined. 

Therefore, consider whether you could position your business for sale to offer more localised trading to a potential EU investor.

Make your business Brexit-proof 


If you have decided to sell your business, and if a Brexit settlement will happen anyway, there is no particular reason why you cannot prepare for a business sale with both those eventualities in mind. 

Brian Harris, chief product officer at Currencies Direct, believes: "There is time to position your business, to plan and to be as prepared as you can be to maximise the opportunities and minimise the pitfalls of any changes yet to come."

Harris notes that taking actions such as minimising the effects of currency volatility on your business, nurturing your existing customer base, focusing on local suppliers and growing your UK market, are all ways of making your enterprise as flexible and adaptable as possible in the current climate.

Not only will such measures improve your present and future trading prospects, they will also differentiate your company as a more desirable acquisition which is much better placed to thrive amidst market uncertainty.

By Jo Thornley, Head of Brand and Partnerships at BusinessesForSale.com. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.