This disparity between supply and demand looks set to continue in 2016. low volumes In the business retail market, Christie & Co experienced continued ‘business blocking’ during 2015. interest receivable on deposits is at an all-time low and many private business owners are simply staying put. Coupled with the fact that banks have mostly disposed of large portfolios of over-geared loans, the result is that volumes in the market remain stubbornly subdued. In 2016 we may see some spin-o sales from large portfolios that have been bought in recent years as the acquirers sell o the assets that don’t t with their medium-term aspirations. Funding landscape as nick Baker, Managing director of Christie Finance, explains, the lending market has been diversifying since the recession and there are a range of challenger banks in the market. it’s interesting that crowd funding is also becoming a source of income and debt funding for new and expanding businesses. It appears less appropriate for business-purchase nance, as where any acquisition is uncertain, vendors are understandably reluctant to engage with potential purchasers whose nance is in the public realm. Value uptick With the exception of the Care sector, values have largely recovered to pre-recession levels. Encouragingly, merger and acquisition activity has been evenly spread across all our business sectors. This is one key di erentiator between 2015 and 2014, when the Hotel market was hectic but other sectors weren’t to the same extent. We expect the value of businesses across the medium term to continue to rise and outstrip pre-recession levels, in line with any increase in their pro tability. the changing buy-to-let environment the government’s decision to reduce future buy- to-let mortgage interest tax relief contrasts with business-purchased mortgages whereby currently all interest is allowable. This decision, coupled with the announcement in November’s Spending Review of an increase in stamp duty on buy-to-let properties of 3%, is likely to impact the landlord market in 2016. Stamp Duty on business acquisitions remains unchanged. uncertainty remains Though we expect values to rise in the medium term, there are still areas of uncertainty in several of our sectors caused by factors such as the living Wage, as our sector heads explain in this Business Outlook. Our consultancy team wrote an incisive report on the implications, following this surprise announcement last April. In June 2015 we published our report ‘The UK Nursing Workforce: Crisis or Opportunity’, which was debated in the House of lords, and we will continue to research the area of sta ng costs, whichis highly relevant to all our business sectors. our teams across the UK and abroad have the specialist knowledge and research available to gauge the e ect of various scenarios on business growth. The impact of politics The UK has been through quite a period of political change in 2015 and the continued impact on our markets is varied. the dominance of the Snp in Scotland is dissuading migration from the South which has historically provided lifestyle buyers to Scotland, while in contrast the awaited referendum on the uk’s membership of the EU doesn’t particularly impact our domestic businesses. political instability elsewhere in the world only serves to enforce the uk’s safe haven status. legislative change as we start a new year, as an industry, we are faced with a number of legislative processes which will have an impact on all of the sectors that Christie & Co covers. Whilst the implementation of the national living Wage will undoubtedly create challenges within certain sectors, it would appear that most operators are proactively tackling it and drawing up inventive plans to limit the impact on their businesses. across all of our sectors, it is likely that corporate operators will undergo strategic reviews of their estates and poorer performing units will come out of the corporate sphere and return to the individual sector. We have already seen that there is a ready market waiting for such investment opportunities. A second, more recent example saw the Department of Health announce in December that funding for community pharmacy in 2016/17 will be cut by £170m – a reduction of more than 6% in cash terms. Rumour has circled the market for some months, but as yet we’ve seen no reduction in purchaser appetite. The announcement may accelerate some operators’ plans to exit the market, however, with over 4,000 registered applicants nationally, others may see any potential increase of pharmacies being put up for sale as a real opportunity to acquire in an easing market. overseas interest continues overseas investment volumes should continue to rise in 2016. good businesses enjoying secure tenure of su cient scale in an open market will always attract overseas investment, but the nationality of those purchasers varies depending on currency and political restrictions. Christie & Co’s teams speak 23 languages between them and our network of o ces puts us in an unrivalled position to advise clients on cross-border interactions.