Prospective business purchasers in recruitment need to act quickly and get their finance in place to be ready to complete deals as sellers take advantage of tax breaks ending in April next year, according to Mark Blayney, director of Creative Business Finance.
The announcement in the Chancellorís pre-budget report signalling the withdrawal of taper relief from April 6th 2008, means business owners have only the next few months to sell their businesses while taking advantage of an effective tax rate of only 10% on their capital gain.
After April 6th the lowest tax rate will be 18% - still attractive compared to income tax but a substantial increase which will considerably reduce the proceeds from what is usually a business ownerís most valuable asset.
ìSellers will be looking to beat the deadline before they are hit with what for many will be an 80% tax increase, so itís a bit like being in competition to buy a house, the buyer with the most secure funding arrangements which can be relied on to complete will be best placed to win the deal and to achieve the best price,î said Mr Blayney, who recently launched a new self-help website ñ creativefactoring.co.uk - to assist SMEs with fund raising and writes and speaks extensively on finance and business issues.
ìWe have already noticed an upswing in activity with calls for advice about business sales up by 200% on last week.
ìBut this need to secure finance comes at a difficult time given the current ëcredit crunchí. So if the funders are going to be dealing with a larger volume of enquiries about financing deals, at a time when lending criteria have become tighter, it is even more vital than normal to get the best advice possible about securing funding.
Creative Business Finance specialises in raising cash for owner-managed businesses and SMEs to fund everything from expansion, acquisitions, management buy-outs and buy-ins, to refinancing and turnarounds.
The www.creativefactoring.co.uk site is a free features-based, self-help resource which offers the information needed by business owners to make the right choice of factor or invoice discounter for their situation ñ as opposed to being sold a commission-based recommendation which may not truly suit their needs.
The site offers free downloadable guides to a range of funding options and has a free interactive ëready reckonerí so users can find out how much a business can borrow. In this case it can be used by prospective buyers as well as existing owners.
The company also provides a 24-hour helpline for those who may find themselves needing support.
Creative Business Finance is run by a small team of professionals working across the UK from offices in London and the North East.
A similar site covering commercial mortgage and bridging lenders will be launched on the creativefinance.co.uk domain in October 2007.
Tax deadline looms for recruitment business purchasers
Creative finance calls on business purchasers in recruitment to act as tax deadline looms
