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Accountancy firm Price Bailey has predicted that wealth transfers to millennials are set to be worth over £850bn across the next 20 years, after seeing an increase in interest in trade sales, MBOs and EOTs.
Chand Chudasama, strategic corporate finance partner at Price Bailey, has said that “tired” business owners are looking to sell up before the impending election, adding that plenty of business owners are “exhausted” after stewarding their businesses through inflation, supply chain disruption, currency fluctuations and Covid, and are anticipating tax and/or legislative changes.
The firm said when a new or existing party leader gets into government, tax rates on selling businesses tend to increase, therefore businesses, including international ones operating in the UK, are looking to get their sale in before this happens.
Rather than selling their businesses to those overseas, companies are opting for MBOs and Employee Ownership Trusts (EOTs) to transfer generational wealth and retain knowledge and expertise within the UK, which could see around 50,000 millennials earn up to £11m each over their working lives – assuming a business growth of 6%.
Currently, there are over 17,000 companies in the UK that could sell to their management teams through an MBO.
Chudasama said: “There is a great opportunity for businesses and employees alike to get some real success, but it is a heavily meritocratic process. For millennials to gain the money we predict over the next 20 years, it comes down to an individual’s talent to lead a business. It doesn’t matter where you went to school or who your parents are in this case, it comes down to hard work and determination.”
The management buyout team will typically consist of three people and is built on a foundation of trust between each other and by the sellers and funders, with the current business owners also required to be reasonable on value expectations.
This process can then be repeated to future generations, ensuring that the economic benefits stay in the UK and end up generating over £150bn of tax revenue for the country across the next 20 years.
