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Home > News > M&A deal market after lockdown – update

M&A deal market after lockdown – update

01 March 2021 | Paul Hardman

Tax Jitters

As I write this on 26 February 2021, the business owners that I have spoken to are pushing hard to get their deals over the line in time for Rishi Sunak’s budget statement on the 3rd March. 

From what I hear, there are both reassuring noises about maintaining the growth of the UK economy therefore going light on tax and then some more concerning issues about having to pay for Government support which suggests that the burden is likely to fall on capital and business taxes.

This has translated into making it a good time to ‘tidy the ship’ and thus, for instance, we have seen a lot of company own share buy backs in this early part of this new year. 

Activity Levels

One way of measuring activity levels is HMRC’s response times to clearance applications.  I had heard this week of an EIS application which was returned within 3 days but that was out of step with expectation. For capital tax clearances (e.g. mergers and demergers) the Revenue seem to be taking all of the 30 days allowed to them.

Certainly, anecdotally trademark and patent attorneys have reported high levels of start-up activity through this Covid period.  Our experience reflects this, with people seeing new opportunities opening up as we adjust to new ways of working and communicating, and for some, they now have more time to pursue that long held dream of running their own business or create that new clever invention.

Coming out of Lockdown 3.0

I wrote in November about the winners and losers.  The early opportunities amongst our clients showed in the autumn of last year and have now all been completed. We are just now beginning to see interest in businesses that have not done well in lockdown but are due for a big recovery as Covid restrictions lift.  It is too early to say how those deals will fare and a lot will depend on the next 6 months but unlike the period after the first lockdown the businesses we talk to have made the adjustments to a post Covid world. Many are back to business and are ready to take advantage of the new opportunities that are coming out of lockdown. 


For the deals that are completing, values are at or even above where you would expect.  We are not seeing high levels of failed deals which suggests that sellers in businesses that are not benefiting from lockdown are acutely aware of having to re-establish balance sheets and reset prospects before going to the market again.  There are bargains to be had but they are in picking up businesses that have failed rather than from depressed valuations. 

The Future

It will be interesting to see whether, when we are allowed to go back to our favourite bars, restaurants, hotels, hair salons, gyms, sports and music events, we will see the same sort of consolidation in the leisure and entertainment sector as we have seen amongst the winners over the lockdown period (see earlier article).  My guess is that there will be those who will not want to go through the same nerve-shredding experience again and will see strength through consolidation but for prospective sellers they will need to demonstrate that their business is well on the way to recovery and if the tax landscape swings back to favour income over capital, they will not willingly undersell.

Specialist legal advice

If you are looking for a highly skilled senior solicitor with technical expertise and a breadth of experience to handle your deal, look no further. Contact Paul Hardman by calling 0117 906 9425 or email

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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