Market Timing

The UK economy is on a steady upward trajectory, the FTSE 100 remains trading close to its all-time 1999 high of 6,900, unemployment yesterday dropped to a low of 6.2%, meaning that well over 450,000 new jobs have been created in the last year.  M&A in the mid-market is buoyant and better than at any time in the last 5 years. This poses “the big” question for company owners – when is the right time to sell my business? Some owners try to time the market and sell at the top, but none of us have any realistic idea of when the top has been reached – and of course it varies from industry to industry. The large grocery retailers have been on a sharp slide in recent months, while technology and aerospace values continue their upward march. Trying to time the market is a strategy fraught with danger and frequently plagued with disappointment –
easy with hindsight, but almost impossible in reality.

But let us consider carefully, some current market factors. Optimism in the UK economy has grown considerably in 2014 and expectations abound for future growth in many sectors. There are more funds available now for investing in UK businesses from private equity, hedge funds, venture capital, private investors, business angels, innovative new lenders, “challenger” banks and even the traditional banks, than at almost any time in the last 20 years. Coupled with this, the UK now enjoys the most advantageous capital gains tax rates for entrepreneurs in the last 30 years. With all these positive factors aligned for private company sales, now must surely be the best conditions we have seen in many years for considering a company sale. Missing this alignment of positives could mean having to wait 5, 6 or even 7 years for the next upturn and a key questions are “Will it be as good as this one?” and “Will the business continue to grow and prosper under this ownership?”
These are very important and personal decisions and can only be made by the people involved. Our position at Pace Equity is simply to inform and assist, employing our professional market experience.

If you would like a no-commitment, professional and objective discussion on the right time to sell your business, please contactPeterchallis@paceequity.com in assured confidence.