A new report from Gambit Corporate Finance’s Human Capital team sets out why business owners have a crucial six-month window of opportunity to capitalise on favourable market valuations, consolidation, hiring and demand trends before anticipated changes to the Capital Gains Tax regime are implemented.
The report, Human Capital Exit Timing Considerations, highlights the following key points:
Rising valuations – The Human Capital sector has seen a significant recovery in valuations since the initial onset of the pandemic, with valuation multiples doubling in the last twelve months – buoyed by interest from private equity companies who hold a record £1.7tn of dry powder.
Increasing consolidation – Recent quarters have seen a sharp rise in M&A volumes, driven by anticipated potential changes to rules around CGT, an abundance in the availability of capital from a supportive and flexible debt market, and cash reserves of publicly listed Human Capital companies have more than doubled over the last 12 months to 121%, enabling greater levels of strategic M&A.
Positive hiring outlook – Recent hiring data shows that job vacancies in the UK rose at the fastest month-on-month rate in 23 years in April according to the REC, driven by improving business confidence, skills shortages and a resurgence of permanent recruitment activity.
Sectors in demand – Covid-19-resilient staffing sub-sectors such as healthcare, IT, Professional and Engineering continue to see robust levels of acquirer demand as well as hiring resilience and buoyancy. Technology enabled assets in these markets are also attracting enhanced appetite amidst a wider ‘consolidation wave’ for staffing platforms.
Geraint Rowe, Partner at Gambit Corporate Finance and a Judge for the 2021 TIARA Recruitment Awards, commented: “This is a crucial six-month period for Human Capital business owners considering an exit to capitalise on optimal conditions for maximum value realisation. With CGT changes firmly on the agenda for the Autumn Budget, it is of paramount importance that business owners fully consider and analyse their realisation strategies with expert advisors to ensure that the window of opportunity is not missed.”
Simon Marsden, Director, Human Capital, added: “Market fundamentals remain strong, with demonstrable buoyancy across key metrics such as deal volumes, valuations, hiring data and levels of sub-sector activity. Human Capital business owners considering an exit are in the driving seat and have six months to ensure the value in their shareholding is optimised before any changes to CGT are announced in the Autumn.”
To read the full report, click here.