Election sparks merger deals activity in South Yorkshire region

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Uncertainty surrounding possible changes to tax reliefs and incentives after the general election - along with improved dealmaking conditions - have helped to fuel recent merger and acquisition activity in the region.

That is the claim of accounting specialists EY after the firm’s regional corporate finance team completed six transactions in the last 12 months and currently has a pipeline of six live mandates.

EY tax director Rachel Engwell believes the firm’s recent activity has been influenced by uncertainty surrounding potential tax changes following the election and an eagerness to get deals done before or soon after May 7.

She said: “Over recent months we’ve seen senior executives and management teams considering the impact of a change in Government on their future exit plans. They are mindful of the possibility that, in future budgets, the next Government may seek to change or even withdraw certain valuable tax reliefs, but that they could still claim these reliefs by transacting before or as soon as possible after the general election.

“Entrepreneur’s Relief, which allows qualifying individual shareholders to claim a 10 per cent tax rate on the sale of their shares, and the Employee Shareholder Status, which provides for a 0 per cent tax rate, are just two incentives for sellers and incoming management shareholders to consider when thinking about a transaction. Add this taxation uncertainty to the improving economy and strong deal market dynamics, and you’ve got conditions in which private shareholders have reflected carefully on their exit options.”