Business exit strategies: Should you be planning ahead?

5 Jul 2023

New studies from a money management company called Evelyn Partners show that most people who own businesses making more than £5 million a year are getting ready to leave.

About 65 per cent of business owners in the UK are thinking about selling their businesses, with almost half planning to do it within the next year. The reasons why they want to sell so quickly are different for everyone.

The primary motivator seems to be the General Election which will happen within the next 15 months, instilling concerns about a potential change in Government and consequential alterations to taxation. This political uncertainty has triggered a quarter of business owners to hasten their exit plans.

Another significant reason for considering the sale of a business is the difficulty of accessing long-term capital and investment. Increasingly strict conditions for financing have pushed one in four to contemplate selling.

The complications surrounding post-Brexit trade arrangements and the effects of high inflation have also pushed many business owners to sell.

With inflation driving up the cost of labour, energy, and materials, about 23 per cent of business owners have chosen to sell their businesses for this reason.

Personal finance challenges also factor into this trend, as business owners look to liquidate the equity in their businesses.

This trend is also due to money problems people have in their personal lives, as owners try to get cash from their business’s worth.

However, 36 per cent are waiting a bit longer to sell their business, hoping they can get more money for it. The most popular way of leaving their business is selling to private equity, which is a type of investment group. In fact, 20 per cent of business owners want to sell to private equity, with 11 per cent planning to sell a smaller part, and 9 per cent planning to sell a larger part of their business.

More and more business owners are also thinking about letting their employees own part of the business, with 18 per cent considering this way of doing things.

Are you a business owner who has considered an exit strategy? Please contact us today to find out how we can assist you.