The CEO argues that even in difficult times, entrepreneurs have been able to realise good sums when exiting their businesses, but he stresses the need to invest cash wisely and promptly.

UK entrepreneurs have made £11.8 billion ($14.6) from selling their businesses last year, showing how this segment of the population built a new cohort of wealthy individuals, according to research by Bowmore Asset Management.

That number was 59 per cent lower than the £29.1 billion UK entrepreneurs made from selling their businesses in the previous year (2019/20). The fall in the amount of money that UK entrepreneurs made was partly due to the early part of the Covid pandemic causing a slump in M&A activity.

The economic slowdown of the pandemic meant entrepreneurs became more reluctant to sell at reduced valuations. Prospective buyers were also put off from buying UK businesses in the first six months of lockdown due to major uncertainty over the economic effects of the pandemic. In addition, lingering concerns over social distancing meant that due diligence, needed as part of the M&A deals, was harder to undertake.

Mark Incledon, chief executive officer of Bowmore Asset Management, said: “British entrepreneurs have had another good year for selling businesses, with billions of pounds more brought in.”

“Even during the extremely challenging economic conditions of the pandemic, UK entrepreneurs were able to generate significant amounts of money by exiting their businesses.”

Incledon added that entrepreneurs who have sold their businesses recently should consider investing these profits to maximise future returns: “The first order of business for entrepreneurs who have sold their companies should be reinvesting that money sensibly. Yields are now more generous, but inflation is eating away the value of savings at a far faster rate than normal.”

“However, valuations are depressed across a wide range of asset classes and those who invest wisely today stand a good chance of benefiting in the long term,” he said.

Amount of money made by entrepreneurs selling their businesses – based on HMRC data on Entrepreneurs Relief/Business Asset Disposal Relief
 

* Year end 31 March 2021. Source: HMRC

Bowmore Wealth Group is an independently-owned business based in London and Bristol, specialising in financial planning and investment management. Within Bowmore Wealth Group sits Bowmore Financial Planning, a Chartered Financial Planner for private clients, trustees and corporates, and Bowmore Asset Management, a discretionary fund manager.