Let’s make 2025 the year that sellers take back control

The mergers and acquisitions (M&A) landscape has changed considerably in recent years.

Between 2019 and 2022, the M&A market was awash with “buy-and-build” acquirers who had plenty of cash to flash and there was no shortage of brokers to funnel sellers into consolidators.

This dominance by brokers and buyers left many sellers disappointed in the M&A process. According to an analysis of 40,000 M&A deals over 40 years reported by Fortune, 70 – 75% failed to meet expected outcomes.

However, we’re now in a completely different space. After a record-breaking 2021, when Reuters reported that global M&A volumes breached $5 trillion for the first time, the market cooled in 2022.

What’s more, the Financial Conduct Authority (FCA) is placing greater scrutiny on the due diligence conducted by buyers on firms they plan to acquire.

Could this be an opportunity for sellers to take back control in 2025?

The M&A market could be on the cusp of significant change

As you can see, the current M&A landscape is very different to how it looked several years ago. And there might be some big changes yet to come.

On 7 October, in a letter sent to advice and investment firm bosses, the FCA announced its intention to “undertake multi-firm work to review consolidation within the market”.

As part of this consolidation review, the FCA will “assess and challenge” the suitability of any planned acquisitions of regulated firms.

Where acquisitions are completed without gaining regulatory approval, the FCA may, “use our enforcement powers to object to the transaction or initiate criminal proceedings”.

This greater emphasis on due diligence and the “delivery of good outcomes” could transform the M&A market.

For a start, it may mean that business valuations are reduced to a more reasonable level and that a new type of buyer emerges. For example, we might see more privately-owned buyers returning to the scene.

A recent investigation by Citywire has already thrown a spotlight on consolidators overseas. The findings show that UK advice consolidators have built up at least £3.4 billion in debt and borrowing facilities, much of it held in offshore accounts.

These revelations came in the wake of the FCA’s announcement that it would be reviewing the consolidation market and that firms need “a credible plan to service the debt” used to fund acquisitions.

So, if you’re considering selling your business, there’s a lot to think about. You need to decide if it’s the right time for your business, but also if the landscape is conducive to selling.

Planning your exit well ahead of when you want to approach the market could help you take control of your business sale and ensure that you come out of the process smiling.

Preparation is the key to a satisfying sale

Exiting your firm is much more than a transaction. It’s a major phase in the life cycle of your business.

Whether you’re thinking of selling in one year, three years, five years or 10 years, you need to take the time to prepare your business for sale.

Start to invite, check and challenge into your business, and explore your options for selling.

Without this careful planning, you might struggle to find the right buyer, or any buyer at all for that matter.

You may find it helpful to ask yourself:

• Do I want to use a buyer’s broker or go it alone?
• Should I appoint an M&A adviser?
• Is an internal or an external sale right for me and my business?
• What’s the value of my business?
• Is my business ready for sale or is there more work to do?

If you’re thinking, “That sounds like A LOT”, you’re not wrong!

Fortunately, the Melo team is here to help.

I think I’m ready to sell my business, help!

Our newly revamped Exit Readiness Assessment is designed to help you decide if you’re ready to exit your business and what your next steps might be if you’re not quite there yet.

If you’re five years or less away from your planned exit, our unashamedly detailed questionnaire will help you understand exactly where your business shines and where it may need a little tweaking to make sure it’s ready for sale.

We’ll help you create a clear road map to exit, whatever stage your business is at.

2025 is the year sellers take back control. We can feel it. And we want to be there to help you.

Get in touch

If you can’t wait to get our take on your business and find out how to prepare for a successful sale, we’d love to hear from you.

Drop us an email at hello@melo.co.uk or call us for a chat on 0113 4656 111.