UHY Hacker Young | Chartered Accountants

Partial Cash Out deals – The New Alternative?

29 November 2019

With uncertain political times apparently having an effect on UK M&A activity and deal values (see the recent Experian Market IQ UK and Republic of Ireland M&A Review YTD 2019), it could soon be the case that vendors may find themselves unable to achieve the values or multiples we have experienced in previous years.

However, this does not mean that there are not opportunities and, in fact, now could be one of the best times for business owners to take a step back and consider medium to long-term strategies. One such strategy for business owners could be to take advantage of a partial cash out deal.

As noted in the Experian Market IQ report referenced above, there is still a favourable funding environment in the UK, and a number of funders are open to deals allowing business owners to take some cash off the table as well as provide development capital to take the company to the next level. This is certainly the case in the North West, with a number of regional funds looking to deploy their capital for the right opportunities as quickly as possible.

From an owners point of view, this type of deal can provide an ideal scenario; allowing them to de-risk their position to a certain extent by taking some money off the table at a beneficial tax rate. This, in turn, can often lead to owners finding the entrepreneurial spirit that enabled them to start the business in the first place, due to the fact they have a supportive partner and a de-risked personal financial position.

Finally, this option, if executed well and with the right partner, should enable further growth of the company. This, in turn, should drive the potential future exit value, leaving the shareholder with a more valuable slice of the pie.

If you are interested in learning more about the possibility of a partial cash out deal or any other potential corporate finance transaction UHY can help. Please do not hesitate to contact me or your local UHY specialist.

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