A large amount of small to medium business owners on both sides of the Tasman are looking to exit their business within the next 10 years, William Buck’s leading Exit Smart Report 2023 has found.
William Buck’s fourth Exit Smart Report, which interviewed a wide cross-section of business owners from a variety of different industries, has found that nearly 72% of small-to-medium business owners are looking to exit their business within the next 10 years while 43% expect to exit in the next five years.
However, this report also found that 64% of business owners who were surveyed have not had their business valued in the last three years.
Mark Calvetti, Head of Corporate Finance at William Buck said that this year’s report indicates a significant lack of planning that will leave business owners shortchanged when they hand over the reins of their enterprise.
“It’s never too late to undertake exit planning, particularly when you are looking to exit the business sooner rather than later.
“However, our report has found that nearly six in 10 business owners do not have an exit strategy in place and one in two have never sought advice on maximising the value of their business.
“These are concerning statistics that suggest many business owners will leave money on the table when selling their business,” said Mark.
The report also found that more than 40% of owners have substantial concerns about being able to find a buyer for their business and receiving their desired sale price, while a similar amount think that the business is heavily reliant on its current owners.
When looking to sell their business, 47% of business owners point to a trade sale as their most likely exit strategy, while more than 28% said they would consider selling to management. More than 25% we’re likely to sell to private equity and over one in four assume the business will be handed down to the next generation of family members.
“I think it’s key for business owners to start planning for their exits at least three to five years before they actually expect to exit.
“This time frame also allows owners to make any changes to a business that will improve its performance.
“Even if you are among the 26% of respondents who expect the business to remain in the family, good succession planning can help ensure any ownership transitions go smoothly,” added Mark.
The report also recommends that businesses should seek advice on structuring their organisation in a way that maximises profit. Owners planning to retire are advised to prepare for longer handover terms as they transition away from their business.
Download your copy of William Buck’s leading Exit Smart Report here.