It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead.
It has become something of a tradition, given that we’ve been doing this now for over 30 years.
Here we speak to Seb Saywood, investor at BGF, the growth capital investors.
2024 has been a year of significant political change – change that has naturally brought with it uncertainty for regional businesses. This, in turn, has influenced decision-making and raised questions about whether businesses should go full throttle on growth or take a more reserved approach to expansion.
Despite announced tax rises that will have a material impact on many businesses, now that we are past the ‘Budget cliff edge’, companies can focus on the year ahead with more clarity and focus. There’s no doubt that this kind of certainty positively influences deal activity.
Against a backdrop of National Insurance Contribution (NIC) rises, we expect businesses to focus on productivity more than ever in the next 12 months, with ambitious management teams grasping the challenge, while others may choose to retrench. This could translate into more investment from businesses into tech/AI and automation, which could manifest in a broad range of industries from manufacturing to healthcare and retail.
From a deals perspective, tightening margins due to tax rises such as NIC, will intensify the pressures being felt by some businesses. Some will successfully pass it on with inflationary consequences. Others will be tipped towards exit. This could present acquisition opportunities to those wanting to consolidate and generate synergies and economies of scale. CGT changes could also have a knock-on effect on M&A, resulting in increased activity in the short to medium term, as people look to realise the value of their investment – completing cash-outs, or selling up entirely.
Ultimately, regardless of these influencing factors, high quality management teams and strategically valuable assets will always be attractive to investors. When it comes down to it, the vast majority of entrepreneurs are driven by something more than tax.
