Gambit announces the publication of its Human Capital Market Outlook for 2020.
2020 Outlook Summary:
- Corporates face an increasingly competitive landscape in 2020 in which M&A activity becomes a critical factor in countering the insufficient level of organic growth opportunities available.
- The market’s concerns around IR35 persist, with the low level of preparedness likely to lead to acquisition opportunities within subsector niches which will reduce the administrative and legislative burden.
- Further clarification on the implications of IR35 from the UK government will contribute to more long-term investment decisions being taken, driving increased appetite for UK M&A transactions in sectors heavily reliant on contractors.
- We expect acquirers to look to diversify their portfolios in 2020, in an attempt to insulate their business models against the widely debated IR35 changes.
- Greater certainty around Brexit will improve decisiveness, with the hesitation in the market observed in 2019 rebounding in 2020 as M&A pipelines containing UK assets are converted.
- The historically predictable seven-year-cycle is entering its ninth year, extended by the uncertainty that has surrounded issues such as Brexit and IR35 delaying the peak in the market into late 2020 or early 2021.
- There is a growing impetus for sellers looking to realise value to do so whilst the market is still favourable, while buyers face an opportune moment to engage in M&A activity before valuations rise further.
- With unprecedented levels of capital available to acquirers, we expect a heightened level of M&A activity in 2020, with high quality assets attracting enhanced valuations.
- The review of Entrepreneur’s Relief and its cost to the Treasury will disrupt the market in the short-term, with concerned sellers expediting their sale plans into early 2020.
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