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Selling a business due to rising energy bills

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Finding a business buyer during the energy crisis

The energy crisis is upon us as wholesale gas and electricity prices are increasing, with no permanent business energy price cap in sight to regulate the maximum energy suppliers can charge for average energy use. As the cost of running a business is climbing, business owners must do everything in their power to maintain positive cash flow and profitability, while increasing the funds earmarked for overheads, such as energy bills.

Businesses in energy-intensive industries with naturally high gas and electricity usage will be most affected, such as food, drink and hospitality, to retail, shipping and manufacturing. If you want to sell a business due to rising energy bills, or during the energy crisis – what must you consider?

Help with business electricity and gas utility bills

If you can’t cope with increasing business electricity and gas utility bills as it is biting into company cash flow, check what help is available, such as the Energy Bill Relief Scheme.

Energy Bill Relief Scheme – Under the Energy Bill Relief Scheme, businesses will benefit from a discount on gas and electricity unit prices throughout Winter 2022. Government guidance for the Energy Bill Relief Scheme states:

To calculate your discount, the estimated wholesale portion of the unit price you would be paying this winter will be compared to a baseline ‘government supported price’.

For all non-domestic energy users in Great Britain this government supported price has been set at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.

The government supported price is less than half the wholesale prices anticipated this winter and the level of support for each business will vary depending on the type of contract and date.

Payment plan/Time to pay – If forecasted energy bills are set to squeeze your budget and detrimentally affect the financial health of your business, seek relief by negotiating a payment plan with your energy supplier or asking for more time to pay. Paying your energy bills in instalments can provide breathing space if you’re experiencing cash flow problems.

Business finance – You may seek business finance to boost company cash flow and help cover energy bill payments.

As utility bills are increasing as standard across the UK, business sellers will factor this into their decision-making process when looking for a business to buy.

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Selling your business due to the energy crisis

If you want to sell your business in light of the cost of living crisis, the route that you take next will be determined by the financial health of your business. If your business is in financial difficulty, or on track to becoming insolvent – speak with a licensed insolvency practitioner. An insolvency expert will explore company restructuring procedures through which to strengthen the financial position of your business.

If you wish to sell your business to forego the stress of operating a business during the cost of living crisis, speak with a business transfer agent. Our business brokers will help prepare your business for sale, value a business to calculate how much it is worth and target suitable buyers.

Selling a business during the energy crisis

If you are planning to sell a business during the energy crisis, conduct a brief assessment of energy costs and usage so you are prepared to answer energy-related questions if this is raised by potential buyers. Energy efficiency may also be a hot topic of conversation in light of the energy and cost of running a business crisis.

For more information on selling a business, get in touch with a member of the Selling My Business team.

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