It is impossible to avoid the endless debate and commentary on what the future holds for the UK following last week’s vote. Businesses will undoubtedly be affected but SME owners should use this opportunity to review their plans for the future and consider the options they have available to them. Those with growth plans should not put these on hold but ensure they have made themselves aware of any issues that leaving the EU may give rise to.
Having spoken to a number of banks, the fear they have is that businesses will not want to take on additional borrowings for the foreseeable future. This seems absurd when they are keen to lend. Businesses should keep in regular contact with their bank and discuss their plans with them. They will more often than not be supportive.
The availability of debt presents an excellent opportunity to those business owners who are planning to sell in the next few years. This may have been originally based upon a sale to a third party. However, the current uncertainty will probably lead to a reduction in the number of potential trade buyers and will have an impact on the multiples buyers are willing to pay. A Management Buy Out (MBO) could be the obvious answer.
There will be a number of businesses that have a management team in place, that given the opportunity to undertake a MBO, will jump at the chance. The message to the owners of these businesses is start talking to the management team NOW!
For those businesses that do not have the necessary management structure for a MBO, the current economic climate gives them time to plan and put the required team in place. This requires careful consideration and the requisite advice should be obtained as part of this process.
Therefore, business owners who want an exit in the short to mid-term, should seriously consider if an MBO is an option. If it is, then speak to your bank or your adviser. I have been involved in a significant number of MBOs and PM+M Corporate Finance are currently advising on a number of MBOs. Therefore if you want to pick our brains on the subject, please feel free to give us a call.