Potential tax changes ‘spark sell-off surge’
DEAL-hungry private medical insurance company Chase Templeton says uncertainty over future government tax policy is prompting would-be vendors to approach it to explore possible exits.
The Lancashire company, which is backed by Manchester-based Palatine Private Equity, says with the General Election three months away, a “climate of uncertainty” has sparked a surge in the number of brokers and intermediaries exploring potential sales.
Chief executive Warren Dickson said: “Whereas in the past we would be the ones making the running, since Christmas more would-be sellers that have been calling us. We took five calls alone in the first few days in the office after the festive break.”
“People seem unsettled because the polls are swinging back and forth, the frequency of policy announcements is intensifying and speculation about what the next government may do to the tax regime increasing.”
He believes concern, mooted in the financial press, that Entrepreneurs’ Relief on capital gains tax maybe reformed is a major factor.
The tax benefit allows those selling all or part of their businesses to pay just 10% on capital gains of up to £10m against the standard rates of 18% and 28%.
“The reported cost of this relief to the Exchequer has been growing, with, in the last financial year a hit of £2.9bn recorded. Whether it will survive in its current form under a new government of whichever political persuasion is highly debatable. Both the Lib Dems and Labour have signalled they would make reforms,” Dickson said.
Having completed 26 deals last year Chase Templeton says it is expecting to do fewer but bigger transactions this year and is close to announcing its second 2015 acquisition. The Darwen firm now generates more than £100m in annual premium income and employs over 70 staff.
