So, after a tumultuous 2020 for every single person in the country and for each and every business across the land, what does 2021 hold for the accountancy profession?
Unsurprisingly, making forecasts early on in a new year, is a dangerous game. How many forecasts made this time last year look risible in light of where we now stand? B
Nonetheless, let’s look back at 2020 because I think we’ll gain a reasonably good insight for the coming year from doing so.
2020 started with the ongoing imbalance between buyers and sellers, which although not pushing up prices paid, made for a hugely frustrating experience for buyers who were learning about this for the first time.
Sellers could have a wider choice in the beauty parade and it was harder for first time buyers and those seeking to start out on their own by making a purchase, which is of course the fastest way to get going. Buyers with a track record of performance present more credibly to both agents and sellers.
Successful established firms were ending up in the hands of other firms with a good track record, not unlike other markets.
A number of deals completed as planned in 2020 but a similar number were deferred to 2021 or beyond.
In spite of this buyers flocked to us as if it was business as usual at UK plc.
Accountancy was one of the hottest sectors to be in during Covid because so many businesses needed support, be it for borrowing, furlough advice or a full root and branch examination of their business model post-Covid.
Creative destruction is exactly where a trusted business adviser wants to be in the thick of!
Practitioners were overlooking their reasons for selling because the money was rolling in with no end in sight to the crisis. Just one more year….
Well, that year will be coming to an end in 2021 between the middle and the end.
There were firms who lost a lot of clients due to sectoral focus or the fact that they had a large number of clients with high fixed costs that were simply unsustainable in the face of no income and a very thin balance sheet.
2021 looks like a year of two halves, from where I sit today.
We don’t expect major movements before the summer but once the vaccine does what it is expected to do, the latter half of the year should see firms come back to market, given that they can prove that they have weathered the storm, especially if in a sector that was vulnerable.
No movement in multiples of between 1 and 1.2x GRF is forecast
However, one other trend that is likely to gain traction is the move into speciality areas.
As automation, AI and the commoditisation of compliance gather pace we are getting asked more often for firms with a focus on areas such as Corporate Finance, Financial Services, Tax, Lettings, Contracting, forensics, Insolvency and PAYE bureaux.
We believe that these areas could see a firming of multiples especially in a strategic situation.