At The Corporate Finance Network, we have been looking past the headlines and digesting the broader commercial impact of the Budget on clients’ M&A aspirations.
While deal appetite will always rest on the fundamentals of each business, the new measures will influence valuations, exit routes and the shape of transactions over the next few years. Early, strategic conversations will be essential for owners considering growth, acquisition or exit.
- Exit routes – not so much of a relief?
Updates to EMI schemes, including increased limits, strengthen incentives to retain and motivate key managers, which is critical for deal stability and buyer confidence. Conversely, the reduction in capital gains tax relief for Employee Ownership Trust (EOT) exits may make this route less attractive for some vendors and shift interest back towards trade sales, management buyouts or ETAs.
At the same time, the impending reforms to Business Property Relief and Agricultural Property Relief from April 2026 remain a major factor in succession planning. Owners with business interests above £1m (or £2m for couples) may now face a 20% inheritance tax liability on the excess, making early planning essential. The need for formal valuations will also rise sharply.
- Impact on valuations
Government priorities around innovation, digitalisation and the IS-8 sectors within the Industrial Strategy will shape where the most public-private investment flows next. Higher EIS and VCT limits are likely to support valuations for scale-ups seeking equity, while refreshed allowances for capital expenditure, R&D and digital transformation may boost buyer appetite in tech-enabled or capital-intensive businesses.
Businesses demonstrating sustained growth, diversified but reliable revenue streams, strong leadership teams and clear plans to mitigate risks, will remain the most attractive targets.
- Which deals will be successful?
Vendors of companies with strong fundamentals and a well-prepared exit strategy will always find buyers.
For purchasers, a clear strategic rationale for acquisition, robust due diligence and a tight integration plan, will bring results.
For those looking to grow revenue & profits, astute management, forward-looking financial plans with sufficient capital to deliver on strategies and resilient working capital will have most chance of achieving their objectives.
Advisers have a vital role in preparing clients for these conversations, ensuring their businesses are resilient, well-structured and ready for scrutiny.
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