The owners of the majority of UK businesses with a turnover of £5 million upwards are pursuing an exit strategy, according to new research from leading wealth management and professional services group Evelyn Partners.
In a startling reflection of the uncertainty prevalent in the UK business environment, 66% of owners are looking to sell off their enterprises, with two in five (40%) planning to exit within the next year.
Exit plans across the UK’s business landscape have been fast tracked, with nearly a quarter (23%) of business owners having accelerated their plans to sell or wind down their business in the past 12 months.
The political landscape is the primary motivator for this decision. With a General Election set to take place within the next 15 months and Labour having a commanding lead in the polls, concerns over a potential change in UK government and subsequent changes to the tax regime have been cited as the top reason for UK business owners choosing to expedite their exit plans, cited by 25% of respondents to the survey.
Challenges accessing capital and long-term investment have also been cited by many business owners. One in four (25%) business owners have been encouraged to sell due to ongoing challenges accessing long-term capital, while 18% have cited the rising cost of this capital as a key motivation to sell. A similar number (19%) have cited the withdrawal of a key investor as behind their decision to pursue an exit strategy.
Complications navigating post-Brexit trade arrangements have been cited by 18% of business owners as a factor in deciding to sell, while 23% of business owners have decided to sell due to the toll that high inflation has had on their business, pushing up the cost of labour, energy and materials.
Personal factors are also at play, with 25% of business owners hoping to unlock the equity tied up in their business to contend with current personal finance challenges.
As well as 23% of business owners indicating that they have brought forward their exit plans over the past 12 months, 36% also said they had postponed their exit plans.
Tom Shave, Partner at Evelyn Partners, commented: “After a number of challenging years for business owners, it’s understandable that many might be considering their position for the years ahead. As the General Election nears, many business owners are concerned about the potential for tax changes, such as an increase in the rate of capital gains tax. Businesses also continue to face headwinds when it comes to their operations and long-term funding. It is therefore understandable that many business owners are viewing the current climate as an opportune time to realise the gains of their success. However, others have delayed their exit plans which is likely to be driven by current economic uncertainty and potential worries that they may not get the best price for their business, as evidenced by a slowdown in M&A activity.”