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February 2013

Press and Journal Mergers and Acquisitions Supplement

North East of Scotland Shows Increase in M & A Activity


Robert Bain

Bob Bain, managing partner at Hall Morrice



M & A activity is on the increase following several years of relative inactivity as companies suffered shortfalls in profits and buyers were unable to seek funding for deals. According to Bob Bain, managing partner at Hall Morrice, one of the drivers of this growth in deals is Entrepreneurs' Relief. This gives capital gains tax of 10% of qualifying gains up to £10 million for qualifying shareholders on a company sale.


"It's fair to say that the past few years have not seen substantial levels of M and A activity. However, more recently, Entrepreneurs Relief seems to be making a significant impact on the number of deals we're seeing.


"There's local evidence of business owners building up their business - or starting them in the first place - with a view to selling them. It's a good time for them to take advantage of better values than we've seen in recently and purchasers have access to better funding routes than there have been since the banking crisis."


Whether this trend can be seen across the UK is debatable, but the oil and gas life cycle is proving advantageous for service business which are making good profits.


"Profitable businesses in this sector are obviously appealing to funded - and fundable - buyers whether these are individuals, trade buyers or private equity houses.


"The days of keeping a business in the family for generations have gone. Some new starts are specifically setting up their business with a view to a sale within five years; rather than building their company beyond 40 employees as they might have done historically. Some individuals have conversations with us about exit strategies before their business has even made its first sale. These businesses offer a clear advantage to a larger entity which can operate divisions as they have the structure in place to run them - but don't necessarily wish to start a new division. Entrepreneurs are good at building businesses to a certain size but not necessarily good at running large businesses; large businesses are not necessarily innovative.


"Entrepreneurs' Relief is a massive incentive, especially for the serial entrepreneur who believes you're not a true entrepreneur until you have 'done it more than once'. However enticing this carrot is though, the timing of the sale is critical and early planning for an exit is always wise so that the operational aspects of the sale can be implemented, profits are driven up and individual make time for efficient tax planning."



Bob Bain is a managing partner at Hall Morrice, founded in 1976, one of Scotland's leading independent firms of chartered accountants and has offices in both Aberdeen and Fraserburgh. Based at 6 & 7 Queen's Terrace in Aberdeen, Hall Morrice can be contacted on 01224 647394 or at accounts@hall-morrice.co.uk

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