YFM Equity Partners’ Dan Perkins “cautiously optimistic” about 2024 exits and stresses importance of early client conversations

Welcome back to our series of exclusive interviews with industry experts. In this series, we speak to key figures in the tax-efficient space to find out their outlook on the new tax year, hear their thoughts on the 2023-24 tax year, and provide their tips for advisers.

This time, we have Dan Perkins, Investor Relations Partner at YFM Equity Partners. Dan joins us to discuss the 2024 tax year and provide some expert advice.

Q: What does the start of a new tax year mean for tax-efficient investing?

A consistent message from all politicians, irrespective of party, is that accelerating growth and productivity is high on the agenda. They view these as fundamental pillars to enabling the much-needed increase in expenditure on public services – with VCT and EIS funding being key planks in the strategy.

It will be interesting to see what other initiatives are developed to help deliver the economic growth the UK so desperately needs – perhaps looking at skills gaps or ensuring R&D tax credits get to those businesses investing for the future – any or all of these can only help with delivering the desired growth and continuing to increase the pool of investment opportunities we see in the tax-efficient investment industry.

Being prepared to invest early when popular offers launch is our key takeaway from the 23/24 season, which saw the BSC VCTs deliver their largest fundraise to date of £90m in just over four months. By launching earlier than usual we were able to avoid the traditional tax year end panic, making the investment journey for both advisers and investors that little more pleasurable whilst also giving ourselves a modest head-start in terms of our 24/25 deployment plans.

Q: Do you see 2024 being a positive year for the tax-efficient space?

The 23/24 tax year was the third highest fundraising year on record. In tandem with this, investments by VCTs continue to rise – in the three years 2021-23 investment rates are 50% higher than in 2018-2020. There aren’t many industries showing such a post-pandemic increase. It’s not a big leap to see 24/25 being a positive year for stand-out entrepreneurs seeking funding as managers look to sensibly deploy their freshly raised capital into the best high growth businesses the UK has to offer.

At the other end of the entrepreneurial journey, the UK M&A market being sluggish over the past 12 months has meant that additional preparation and support (planning and positioning rather than financial) has had to go into delivering and crystallising value. This is likely to continue.

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