With the news that the Government intends to increase Capital Gains Tax, many business owners will be considering a swift sale of their company before the end of March 2025. Senior Manager Kelsey Butterfield discusses why companies should include acquisition as part of their growth strategy and how to identify what the best fit may be for your business.
Buying a business is certainly a lot faster than growing organically. It does have risks, but these can be considerably minimised if the deal is structured correctly and the acquisition process is carried out in an organised way.
If you believe the opportunities far outweigh the risks, this could be a business decision worth taking.
The advantages of acquiring a business could include providing you with operational efficiencies and competitive advantages which result in financial gains.
1. Operational efficiencies
- A well-executed acquisition can result in significant cost savings, such as reducing overlapping operations, centralising functions, and improving supply chain efficiencies.
- Streamlining technology, talent, or infrastructure results in improved productivity and cost-effectiveness.
- In sectors where digital transformation is key, acquiring a company with advanced digital capabilities can enhance the buyer’s technological infrastructure.
2. Competitive advantage
- Acquiring another company can instantly provide access to new markets, customers, distribution channels and products that would take years to build organically and with it, an increased profile in your industry
- Acquiring competitors allows a company to increase its market share, reduce competition, and achieve economies of scale. Larger businesses are generally more resilient and the larger you are, the more you are able to set higher prices or control supply more effectively.
- Buying a company may give the acquirer access to skilled employees, specialist knowledge, or a strong management team, which can drive innovation and improve overall business performance.
- A company with valuable patents, trademarks, or proprietary technologies may be an attractive acquisition target to boost competitiveness.
3. Additional financial gains
- Other financial gains such as tax benefits may also be acquired if there are losses in the target company which can be used to offset profits.
- To assist with succession planning, a larger company is generally easier to sell with more interest from potential purchasers, plus having a larger pool of management may also provide another route to exit via a management buyout.
Given the tax changes and the attitude of many older business owners, some companies will see the next few months as a tremendous opportunity to make swift progress.
If you would like to discuss how we can assist you in identifying your acquisition strategy, finding a suitable target company and supporting the negotiations and process to ensure that risks are mitigated as much as possible, please contact us at 01904 655202 or email enquiries@hghyork.co.uk.
