Uncover two situations where the Budget created opportunities for your clients to act now.
According to many, the Budget had no big announcements and to an extent that is true. There were no major changes to economic policy that lead to an overarching impact on valuations generally; but, as always, there is devil in the detail.
Further taxes on non-employment income, whether property or savings, will change tax payer behaviour. This may lead to more pressure on wage rises as people seek to compensate by obtaining more earned income, although it will be a fine balance for some. Higher wages = either inflation and/or lower profits. Overall, we should probably not expect valuations for most businesses, other than those with the most exciting growth prospects, to change for the foreseeable; maybe that generic (use with caution!) EBITDA multiple of 4x will actually drop marginally.
The withdrawal of the cash ISA changes will help to shore up financial institutions’ ability to invest at scale which is a good thing. Maybe this will lead indirectly to more investment in private companies?
EMI2 will lead to more activity for lawyers and valuers.
The Founder’s Relief consultation outcomes will be interesting as the initial proposal would only benefit a tiny number of people, if any, given the proposed criteria needed to qualify, so those interested will be wanting, no doubt, to encourage government thinking along slightly broader lines.
There was nothing in the budget to address the fact that 10,000s of private companies, shares and other assets will be transferring through the generations in the next decade or so. All we can see is a wall of valuation work required for everyone from sole traders to investors with massive portfolios of unlisted assets especially, but not necessarily only, at probate. As HMRC continues to improve its own use of data to understand where tax may be falling due, you can all expect to start receiving calls from family members and executors who need help in this area. One of the clues that your clients will be hearing soon from the taxman will be evidence that HMRC is hiring – it might be worth putting an alert on LinkedIn!
The results of the US midterm elections and US foreign policy are likely to start to have another wave of macro-economic impacts on valuations. Meanwhile, volatility in the market around the AI story is another big issue to which we are paying close attention. Let’s see how things play out, but at the time of writing suppression on valuation rather than easing is most likely to be the order of the day.
Indeed, given the above, now might be a good time to transfer assets if you have clients who are thinking about that issue.
We are always around to support questions on valuation as well as undertaking work, particularly at speed and cost effectively. Do call or email anytime as we would love to hear from you.
