As a Corporate Finance specialist, I spend my days helping owner-managers secure the best possible outcomes when buying, selling, exiting or arranging finance for business. A key part of this is keeping ears to the ground when major economic updates happen.  

With the world as it is right now, all business owners are feeling the weight of uncertainty, with mixed economic signals and an ever shifting political news cycle.

Growth is happening: But it’s steady, not spectacular

The UK economy has expanded by about 1.1% in the first half of 2025, which is among the strongest in the G7. But inflation remains stubborn, still above 3%. Households remain cautious, and savings are high.

For a business owner, that means demand is there, but it’s also fickle. Your customers are more price sensitive than ever. This means if your margins are tight, you will definitely feel additional pressure.  

It’s a good idea to build in a buffer when you are cash flow modelling. Do not assume every deal or sale will perform as planned, especially when they are high value!

Political uncertainty means risk premiums in valuations

To put it mildly, we are seeing an increasing risk in unpredictability: populist trends, rumoured tax system upheavals, trade policy, regulation, and so on. These can all materially affect business valuations, and switched-on buyers/investors know this.

If you are positioning a business for sale right now, make sure all regulatory risks are laid out. Make sure the worst-case scenarios are clearly modelled, with flexibility built in. Buyers will typically discount where they see high uncertainty.  

You’ll get a much better outcome if you can show you’ve already thought through the various “what if” scenarios.

Increasing cost-pressures: Always plan ahead

Business operating and staffing costs are rising. Utilities are more expensive than ever, and you need to pay more Employer NICs than before – to name just two examples. Furthermore, AI is accelerating at a remarkable rate, fundamentally changing the skills market in front of our eyes. As such, the cost of hiring people who can work with or around AI is also rising – and these people are going to be exceptionally important for many businesses!

So what can you do?

• First, you should review your workforce and figure out which roles are going to be come more expensive or more difficult to fill and retain.
• Then, you should be looking at when you can invest in new technologies, including AI, automated systems and processes. Sooner is usually better than later.
• Also, if you’re growing or preparing for sale, you want to be demonstrating that your people structure is resilient (not too dependent on one founder or key individuals).
• Explore more cost-effective and lower risk ways to retain and incentivise key staff members. Growth Shares are a popular option to explore right now.

Valuations: Size still matters

Larger businesses (higher EBITDA) are benefiting from non-linear valuation increases.

The jump from, say, £500k EBITDA to £1m often brings more than proportionate gains in multiples. Why is this? Because risk falls, buyer pools widen, more strategic options become available.

If your business is not yet at £1m EBITDA, then showing credible growth toward that threshold can make a big difference. Whether through new markets, efficiency gains, or recurring / contracted revenue.

• ‍Learn more: The Tough Reality of Sub £1m EBITDA Deals

Tax and transaction readiness: Don’t leave value on the table

Government finances are stretched and further tax increases are extremely likely in the upcoming Autumn Budget statement, scheduled for November 26^th  2025. Nothing is confirmed yet, but there could be increases to VAT, higher indirect taxes or changes to how Corporation Tax is paid.

When it comes to deals and transactions, this is very important to bear in mind. You should aim to structure all deals for tax as early as possible with the most up-to-date information available.  

You should also ensure you have squeaky clean financials and reporting in place, as well as robust contingency plans for different tax and cost scenarios.

What should you be doing right now?

All businesses are different, and the best course of action will always be to seek qualified advice in the specific areas of concern or interest. However, as a general rule, we strongly recommend business owners looking at current or future deals, consider the following:

1. Stress test your forecasts and make sure you’re factoring downsides into your models.
2. Invest in business resilience, including your finances, people, systems and processes.
3. Think about long-term value, not just short-term headline sales.
4. Get your financials, governance and contracts in order now, not later. Delays almost always cost value.
5. Talk to a specialist early. Small things done right pay off big when it comes to valuation and negotiations later down the line.

If you would like to discuss any of the issues in this blog further, please feel free to reach out directly.