Brexit – what now for business? 08.07.16 - Matt Katz Share this item: Twitter LinkedIn Email As with many areas post Brexit, there is a general feeling of uncertainty on the impact the result will have on trading performance across a wide range of businesses. Economic Malaise Those businesses rooted in certain sectors are almost certainly going to suffer, however aspirationally we would hope it is a “pause” in trade as supposed to a fully-fledged slow down. The Bank of England are encouraging prudence and right now that appears to be the strategy many of the entrepreneurial business owners we are working with are employing. Exchange Rate Effect It’s been difficult to get away from the effect on exchange rates over the last few weeks, and despite much of the doom and gloom it may make inwards investment in acquiring UK businesses more appealing to those overseas. A £10m business now only costs $13m, when a few weeks ago it was $15m. At the same time, those entrepreneurs whose business value is based upon importing products will inevitably see a squeeze on margin and given many businesses are valued on a multiple of EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) their value to an overseas purchaser will have diminished by more than the saving on the exchange rate. However the sentiment on this depends on what the purchasers take is on exchange rates, is it a short term change, if that is the belief there is opportunity for the overseas purchaser, however if it is believed to be a longer term shift an erosion of value can be the only conclusion. Access to Funds Whilst funders may be reassessing their portfolios and how they prioritise their investment opportunities unlike previous economic hiccups there is still a vast amount and array of funds available to invest into growing companies. The strategy already in place by the Bank of England will ensure that this flow of funds doesn’t dry up, and so, albeit with the aforementioned warning of prudence those business wanting to take advantage of these unique economic times will be able to. Other impacts to those mentioned above are also being considered in the following updates: Brexit and international workforces What does Brexit mean for employment law?