Webinar recording: Economic outlook – Is now the right time to sell your agency?
Our latest ‘selling your business’ webinar focused on the current economic outlook, and what the next 12 months could look like for the media and marketing services sectors. In addition to this, we also explored the influence the current economic climate could have on the M&A market, as well as the impact on transactions from a commercial and tax point of view.
We are delighted to share our top key takeaways from our guest speakers David Andrews, Investment Director, LDC, Rhys Herbert, Senior Economist, Lloyds Banking Group, as well as from Moore Kingston Smith, Mel Reed, M&A Tax Partner and Paul Winterflood, Head of Media Corporate Finance.
Their take home points were:
- Interest rates are likely to have peaked, but the Bank of England remains cautious about cutting rates – a reduction in rates may come earlier in 2024 than expected.
- Growth will be stagnant during the winter but mid-next year the UK economy should be closer to the growth target.
- The marketing services sector is benefitting from rapid digitalisation – not only in what it can achieve but also in how it carves a role for agencies to bridge the gap between clients and the complex new ecosystem. Agencies therefore need to understand where they are on their tech journey and how to take advantage of this in the medium term.
- Focus on account development, as securing new business is being impacted by protracted decision-making and it avoids the squeeze on margins through the expensive pitch process.
- While we are seeing a reduction in M&A volumes, quality sells regardless of the macro-economic environment.
- Tougher trading conditions, and a more difficult new business environment for both acquirers and sellers are creating a more turbulent M&A environment which means deal timetables are stretching as acquirers look to get more comfort about the trading performance of sellers.
- There is currently a fragmented acquirer landscape, driven by private equity interest in the space. This means for high quality businesses there are numerous well funded acquirers looking for acquisition opportunities.
- For businesses that are considering selling, make sure you do everything possible in advance of that to ensure your business in the best shape possible when the time comes to sell, this includes make sure you have a high-quality value proposition, good financial data, incentivised and talented management team all backed up by quick, accurate and insightful management information.
- From a tax point of view, consider early on which members of the senior team are critical to the future success of the business and consult on what equity reward structure would be appropriate.
Please get in contact if you would like to discuss this webinar in more detail or if you have any other private equity or corporate finance related questions.