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The upcoming UK Autumn Budget, due on 30 October 2024, holds significant implications for M&A and business transformation as the new Labour government seeks to address a substantial budget deficit
As autumn’s chill descends and the UK braces for the 2024 Budget, all eyes are on Chancellor Rachel Reeves, who is expected to introduce sweeping tax changes that could reshape the business landscape. M&A and business transformation sectors anticipate potential storms, with increased tax liabilities on the horizon. However, for those ready to adapt, silver linings await.
How2-Change is here to help companies navigate these evolving conditions and capitalize on new opportunities for growth and resilience.
The 2024 Budget is likely to bring considerable changes in key areas of taxation. Sources like Cooper Parry suggest that Capital Gains Tax (CGT) may rise, and Business Asset Disposal Relief (BADR) could be withdrawn, affecting owner-managers and private equity (PE) firms. While these shifts may dampen some sellers’ enthusiasm, the Treasury’s objective to increase revenues may create a pre-Budget flurry of deal-making as companies rush to close deals ahead of rate hikes.
Non-Dom Taxation: Expected adjustments to the non-domiciled tax regime could reduce the UK’s appeal to international investors, potentially cooling cross-border M&A. As noted by PwC, this may pave the way for local buyers to seize undervalued domestic assets. How2-Change can guide domestic acquirers, providing expertise in due diligence and post-acquisition integration to ensure they can capitalize on these new opportunities.
Carried Interest Reforms in Private Equity: The private equity sector may also face reforms to carried interest, shifting from CGT to higher income tax rates, impacting investor returns. BDO’s insights suggest that while PE firms could face tighter margins, they also have an opportunity to re-assess investment approaches, focusing on high-value regional targets. Here, How2-Change’s Reality Check® helps PE firms adjust strategies, enabling optimal returns in this altered landscape.
The 2024 M&A outlook is mixed. Deal volumes may be down, but quality assets in the tech, infrastructure, and renewables sectors continue to attract interest. BDO’s research indicates that AI-focused technology companies and green infrastructure will remain attractive, especially as the Budget aligns with the UK’s net-zero goals. Conversely, sectors like oil, gas, and banking may face higher tax burdens, and residential property developers could feel the pinch from possible increases in property developer tax, as highlighted by PwC.
Private equity firms are navigating a unique set of challenges, with mounting pressure to exit aging investments while facing potential tax increases. According to BDO’s analysis, the fiscal landscape could delay some exits. How2-Change offers a way through these complexities by preparing portfolio companies for strategic exits and enhancing valuations through operational improvements. For buyers with capital reserves, distressed or undervalued assets may become attractive targets, and How2-Change’s transformation expertise is invaluable in unlocking value in these acquisitions.
As UK public markets appear undervalued, take-private transactions offer a bright spot amid economic uncertainty. With Reeves’ focus on growth and a stable political environment, EY projects that undervalued UK assets will attract PE interest, leading to increased take-private activity. How2-Change’s experience in large-scale transformations equips acquirers with the tools to manage complex integrations, capture synergies, and drive post-acquisition growth.
Facing higher taxes and market shifts, companies must look inward to optimise performance. BDO’s analysis emphasises that organisations with efficiency and agility embedded in their operations are better prepared to adapt to fiscal changes. How2-Change provides tailored support for:
Alongside our consulting work, How2-Change recently launched the How2-Change Words of Wisdom podcast series. Born from our belief in the power of shared insights, the podcast seeks out fascinating leaders from various fields to share the best advice they’ve ever received—and how it’s shaped their approach to change. Starting with episodes featuring a former special forces operative and global CIO, this series provides valuable perspectives on resilience and adaptability, qualities essential for navigating today’s volatile business landscape.
We invite you to subscribe to How2-Change Words of Wisdom on Spotify or YouTube and join us in learning from these remarkable voices.
The 2024 Budget presents both obstacles and opportunities, especially for companies ready to adapt. How2-Change stands prepared to help businesses meet fiscal and operational challenges head-on, providing guidance through each stage of transformation. Whether it’s restructuring, strategic pivots, or M&A, How2-Change ensures clients can navigate the clouds, seize the silver linings, and emerge stronger and more resilient.
By embracing expertise, insight, and adaptability—principles reinforced by our Words of Wisdom podcast—businesses can turn fiscal storms into growth opportunities. Subscribe, stay informed, and let How2-Change help your organisation capture these silver linings.
Get in touch to share some words of wisdom, or to have an informal discussion about how we might work together.
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