Lead image: (l to r) Harri Lloyd Davies, Alison Vickers, Matthew Denney
Wales’ largest independent accountancy firm, Bevan Buckland LLP, has advised on a record number of transactions in the last 18 months, worth in total over £100m.
The deals include a broad range of business sales and purchases, demergers, partial sales, fundraising and refinancing activities.
Managing Partner Alison Vickers said: “We are pleased to report that we have seen an increase in the number of transactions we have been involved in, boosted by strong activity in Enterprise Investment Scheme funding and a record-breaking number of sales and purchases of online FBA (Fulfilled By Amazon) businesses by our clients.
“We have also been involved in some sizeable whole business sales and exits. Advising clients on business growth, fundraising and exit strategies is a core part of what we do and where good accountants can add value to their clients. Of course, this increase in activity isn’t just good news for us, it also illustrates that the economy here in Wales is buoyant and active, despite the challenges of the past 18 months.”
Bevan Buckland LLP expects fundraising and deal activities to continue to grow next year as the various impacts of the pandemic start to roll off.
Some businesses have performed well over the last 18 months and will be looking to take advantage of their strengthened position.
The pandemic has also seen significant fundraising activity from businesses in Wales, driven by the availability of CBILS (Coronavirus Business Interruption Loan Scheme) and other loan and grant options that have been open to SMEs.
While many businesses are now in a strong cash position post-pandemic, those government-backed funding opportunities are disappearing and repayments will start to become due, coupled with expected interest rates rises. So businesses must assess their balance sheets and cash flow and plan accordingly.
Recent reports from the Development Bank of Wales also show that in some aspects Wales is leading the UK in early-stage funding for new business start-ups and is seeing increasing levels of equity investment, particularly in high growth sectors. Their research showed that 1 in 10 of those high growth start-ups in Wales is based in Swansea, which is a positive indicator for the economic potential of the region.
Harri Lloyd Davies, Partner, adds: “We expect all these factors to feed into future transaction activity and we are gearing up to support our clients. We’re particularly proud that we have supported clients to sell or exit their businesses. Less than 20% of small business owners manage to successfully sell their businesses, and only 5% of those achieve their expected selling price, so if you are planning to sell or exit your business it’s important to have a clear view of your businesses value and a good strategy, which is where having a good accountant helps.”
Tax is an important consideration in every transaction.
Matthew Denney, Tax Partner, says: “The differential between income tax and capital gains tax rates is still significant, despite the reduction to the lifetime allowance in respect of what was called Entrepreneurs’ Relief. It is critical to consider the structure of any deal carefully and to submit the appropriate tax clearances to HMRC.
“With the breadth and complexity of tax legislation increasing, take for example IR35 in the private sector, we are seeing that it is increasingly important to understand your businesses tax profile and compliance processes before your company is subjected to any due diligence. Everyone expects to take advantage of the 10% tax rate, however, it is rarely that simple. If you plan to sell your business you should review your tax position and speak with your accountant before the sales process begins.”
Bevan Buckland LLP is the largest independent accountancy practice in Wales providing practical support and strategic accounting and tax advice for small to medium-sized businesses. Headquartered in Swansea, the firm has offices in Cowbridge, Carmarthen, Pembroke, Haverfordwest and St David’s.