New research from wealth management firm Evelyn Partners has revealed that the majority of business owners with companies that earn more than £5 million annually are preparing for an exit.
With 65 per cent of UK business owners contemplating the sale of their company, and almost half intending to do so within the next year, the reasons behind these accelerated plans vary.
The primary motivator seems to be the looming General Election within the next 15 months, which has instilled concerns about a potential change in Government and consequential alterations to taxation. This political uncertainty has prompted a quarter of business owners to fast forward 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.
However, about 36 per cent have chosen to delay their exit plans in hopes of obtaining a better price for their business.
The preferred exit strategy for these businesses is selling to private equity. In fact, 20 per cent of business owners are looking to sell to private equity, with 11 per cent of them aiming to sell a minority stake, while nine per cent are planning to sell a majority stake.
Employee ownership trusts are also gaining popularity, with 18 per cent of business owners considering this route.
Are you a business owner who has considered an exit strategy? Please contact us today to find out how we can assist you.