Evelyn Partners, a renowned wealth management and professional services firm, found that most UK business owners with a turnover of £5m or more are planning a departure.
65% of UK business owners want to sell, with 40% aiming to do so within a year.
Fast-exiting business owner
23% of UK business owners have hastened their exit plans in the previous year.
Politics drove this choice. With a General Election scheduled for 15 months and Labour leading the polls, 25% of UK business owners cited concerns over a potential change in government and tax regime as the main reason for accelerating their exit plans.
Business owners also struggle with finance and long-term investment. 25% of business owners have been persuaded to sell owing to persistent difficulties acquiring long-term finance, while 18% have cited the rising cost of this capital. 19% of exiters cited a significant investor’s departure.
18% of company owners sold owing to post-Brexit trade issues, while 23% sold due to high inflation raising labor, energy, and material costs.
25% of company owners want to access their firm equity to address personal financial issues.
23% of business owners accelerated their leave plans in the last year, while 36% postponed them.
Tom Shave, Evelyn Partners Partner, said, “After a number of challenging years for business owners, it’s understandable that many might be considering their position for the years ahead. Business owners worry about tax changes including capital gains tax increases as the General Election approaches.
“Operations and long-term funding remain challenges for businesses. Thus, many business owners see the current atmosphere as a good opportunity to reap their achievements.
However, some have postponed their leaving plans due to economic uncertainties and concerns that they may not obtain the greatest price for their firm, as indicated by a slowdown in M&A activity.
Owner exit tactics
Business owners favor private equity exits. 20% of exiting business owners want to sell to private equity, 11% want to sell a minority interest, and 9% want to sell a controlling stake.
18% of firm owners choose employee ownership trusts to depart.
Exit strategies business owners are pursuing as their preferred option
| Employee Ownership Trust | 18% |
| Family succession | 16% |
| Sale to a trade buyer | 14% |
| Management buy out | 14% |
| Minority sale to private equity | 11% |
| IPO | 10% |
| Majority sale to private equity | 9 % |
| Winding the business down via liquidation | 7% |
Tom Shave added: “Exit routes will be unique to each business owner, and while there are clear trends for certain strategies in the current environment, it is important they pursue an exit strategy that is best for them and their business.
“More business owners are exiting through employee ownership trusts. Setting up an employee ownership trust is faster than going to market and gives business owners more control over the firm’ price than external exits, where the market determines the value.
However, business owners should assess how their exit strategy corresponds with their future business and personal goals, such as producing revenue, aligning with succession plans, or releasing maximum equity to explore a new project. Business owners selling are the most personal. Therefore, founders should seek comprehensive guidance that incorporates the business and human aspects of their selling plans.”