Brexit: Planning for Business Exit in Uncertain Times

Brexit: Planning for Business Exit in Uncertain Times

England will leave the European Union in March 2019.  But this is only part of the story as the United Kingdom will then move into a transition period lasting at least 2 years; where the details of the exit arrangements are finalised and the UK’s trading relationship with the European Union will be finally decided. Even at this late stage there are several theories of the kind of post Brexit economy Prime Minister Theresa May (or her successor) might choose and until this is established, the future is likely to remain uncertain.

In light of the most dramatic change to the country, since the Second World War, many SME business owners may feel pressured by the uncertainty. What does this mean for your business? Most of all, how does this affect you if you are considering selling your business in the near future?

According to many researchers, SME’s are likely to be the most affected after Brexit. According to BBC, this has much to do with the fact that Brexit is likely to result in “lower levels of capital investment, reduced access to external finance, lower levels of growth, reduced product development and lower levels of business internationalisation.”

This affects SMEs most because less capital investment means less financial support. If small business owners cannot depend on banks/other lenders for loans and other means of financial support, then they may not be able to effectively run or expand their business. For example, lack of funds may put pressure on cash flow leading to a rise in insolvency, limit investment and expansion plans - or Sellers and Buyers might not feel safe enough to purchase or sell.

In addition, we can expect significant volatility in the currency markets. The pound saw its greatest drop in 31 years after the Brexit announcement - highly affecting all those who import goods and raw materials from and export to Europe, trade negotiations for international companies and mergers.

Brexit has the ability to single-handedly change how business is managed in the United Kingdom. Because of this, there will be a sense of uncertainty not just immediately after it is official in 2019 but also potentially for many years to come. So, if you are looking to sell your business, now might be a good time. This, of course, will require planning and the time to start to do this is as soon as possible, before Brexit takes full effect. If you are a Buyer what better time to start looking around for new opportunities as significant discounts may be available for the right Buyer, particularly Buyers which are fully funded.  

As you weigh your options and deliberate between your choices, consider contacting your local United Kingdom Transworld Business Advisors office. With extensive experience in the selling and purchasing of businesses and awareness of the current economic situation, a specialised broker can assist you with your specific needs.