{"id":11760,"date":"2022-07-15T12:46:20","date_gmt":"2022-07-15T00:46:20","guid":{"rendered":"http:\/\/williambuck1.wpenginepowered.com\/nz\/?post_type=tools&p=11760"},"modified":"2024-07-22T20:29:45","modified_gmt":"2024-07-22T08:29:45","slug":"exit-smart-report-2022","status":"publish","type":"tools","link":"https:\/\/williambuck.com\/nz\/tools\/exit-smart-report-2022\/","title":{"rendered":"Exit Smart Report 2022"},"content":{"rendered":"

[vc_row][vc_column][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row][vc_column][vc_cta h2=”” shape=”square” color=”sky”]<\/p>\n\n\n\n
\"exit<\/td>\nAre you Exit Ready? General checklist<\/strong><\/span><\/p>\n

We work with business owners to ensure they achieve optimal value on the sale of their business.
\nThis checklist outlines some of the fundamental issues to consider when planning your exit strategy.
\nIf you answer no<\/strong> or maybe<\/strong> to any of these questions, we recommend that you seek advice from your local William Buck advisor.<\/span><\/p>\n

Exit Ready checklist ><\/span><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Get in touch<\/a><\/div>[\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”40px”][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]A successful\u00a0exit requires considerable planning!<\/span> <\/span><\/p>\n

William Buck’s Exit Survey is an independent report surveying Australian small-to-medium business owners and C-suite executives, to measure their business’s level of exit readiness.<\/p>\n

Few business owners undertake sufficient planning ahead of an exit. This is a big problem, as considering all the issues upfront could mean the difference between a successful exit at maximum profit and a difficult exit where value may be lost.<\/p>\n

Our analysis is categorised into the topics below. Please scroll down to read the report in its entirety or click on the topic that you are interested in.[\/vc_column_text][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/4″][vc_column_text]1. At a glance ><\/a><\/span>[\/vc_column_text][vc_separator][\/vc_column_inner][vc_column_inner width=”1\/4″][vc_column_text]<\/p>\n

2. Your key exit concerns ><\/a><\/span><\/p>\n

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3. Your wealth and retirement concerns ><\/a><\/span><\/p>\n

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4. What are your plans to add value? ><\/a><\/span><\/p>\n

[\/vc_column_text][vc_separator][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/4″][vc_column_text]<\/p>\n

5. Tax minimisation ><\/a><\/span><\/p>\n

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6. When do you plan to exit? ><\/a><\/span><\/p>\n

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7. How do you plan to exit? ><\/a><\/span><\/p>\n

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8. Post-sale commitment ><\/a><\/span><\/p>\n

[\/vc_column_text][vc_separator][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/4″][vc_column_text]<\/p>\n

9. What can I do next? ><\/a><\/span><\/p>\n

[\/vc_column_text][vc_separator][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_empty_space height=”40px”][vc_column_text]Key findings<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_row_inner equal_height=”yes”][vc_column_inner width=”1\/3″ css=”.vc_custom_1654948188559{background-color: #e0e7f5 !important;}”][vc_column_text]01.\u00a0<\/span><\/strong><\/span><\/p>\n

Older business owners are preparing themselves for a new stage in life<\/span><\/p>\n

Of the owners surveyed, 73% expect to exit their business within the next 10 years and 48% within the next 5 years. 85% of respondents were over 50, with many expecting to retire when they exit their business.[\/vc_column_text][vc_empty_space height=”10px”][\/vc_column_inner][vc_column_inner width=”1\/3″ css=”.vc_custom_1655340956672{background-color: #f7f4f4 !important;}”][vc_column_text]02.<\/span><\/strong><\/span><\/p>\n

Concerns about
\nexiting<\/span><\/p>\n

Over 50% of respondents were either \u2018concerned\u2019 or ‘highly concerned’ that they may not receive the desired sale price for their business, with a similar number being concerned that they would not be able to find a buyer.[\/vc_column_text][vc_empty_space height=”10px”][\/vc_column_inner][vc_column_inner width=”1\/3″ css=”.vc_custom_1654948354385{background-color: #e0e7f5 !important;}”][vc_column_text]03.<\/span><\/strong><\/span><\/p>\n

Most business owners are underprepared for their transition<\/span><\/p>\n

Only 45% of participants have an exit strategy in place and most are not executing strategies to increase the value of their business. Many were also not aware of all of their possible exit options or the potential for having to remain in the business for some time post sale.[\/vc_column_text][vc_empty_space height=”10px”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_empty_space height=”20px”][vc_row_inner equal_height=”yes”][vc_column_inner width=”1\/3″ css=”.vc_custom_1655340969391{background-color: #f7f4f4 !important;}”][vc_column_text]04.<\/span><\/strong><\/span><\/p>\n

Businesses are too dependent on their owners\u00a0<\/span><\/p>\n

The survey results indicate that most of the owners are concerned that their businesses are too reliant on them. 58% of the owners surveyed were still working more than 40 hours per week in their business.[\/vc_column_text][vc_empty_space height=”45px”][\/vc_column_inner][vc_column_inner width=”1\/3″ css=”.vc_custom_1654948626153{background-color: #e0e7f5 !important;}”][vc_column_text]05.<\/span><\/strong><\/span><\/p>\n

Business owners are too dependent on their business<\/span><\/p>\n

Up to 40% of the business owners surveyed will need to sell their business to fund their retirement plans.[\/vc_column_text][vc_empty_space height=”45px”][\/vc_column_inner][vc_column_inner width=”1\/3″ css=”.vc_custom_1655340986006{background-color: #f7f4f4 !important;}”][vc_column_text]06.<\/span><\/strong><\/span><\/p>\n

Not getting the right advice early enough\u00a0<\/span><\/p>\n

Only 21% of respondents had sought tax advice on how to best structure their business for sale. Only 28% of participants had their businesses independently valued in the last three years and only 33% had sought advice on how to maximise the value of their business.[\/vc_column_text][vc_empty_space height=”45px”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”40px”][vc_column_text]<\/p>\n

Most business owners have some understanding of the importance of annual business planning. Unfortunately, too few realise the importance of proper exit planning in ensuring that they maximise the price they receive when they finally decide to sell. <\/span><\/p>\n

(LIZ SMITH, DIRECTOR)<\/span><\/p><\/blockquote>\n

[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” css=”.vc_custom_1629771733734{background-color: #f3f3f3 !important;}” el_id=”1″][vc_column][vc_column_text]1. At a glance<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_cta h2=”” shape=”square” color=”sky”]This year, of the over 200 participants we surveyed, 52% of respondents were aged 60 or more and 85% were over 50, indicating the majority of participants were relatively close to the retirement phase of their life. Furthermore, 90% of the respondents had ownership interests in their businesses, with most owning more than 50%. A high proportion 86% of the respondent’s worked for businesses that had less than 50 employees.<\/span>[\/vc_cta][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”2\/3″][vc_column_text]Generations of respondents<\/span><\/p>\n

This year, our survey revealed that 44% of respondents were aged over 60, almost a third were aged between 50-59, 20% were aged between 40-49 and only 8% were younger – all between 30 and 39.[\/vc_column_text][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_column_text]About the respondents\u00a0<\/span><\/p>\n

Most for profit sectors were represented in the survey, with the highest representation being from professional services, at 20%, followed by health at over 12%, and retail and wholesale and agribusiness – both of which were represented by 11% of the respondents.[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column_inner][vc_column_inner width=”1\/3″][vc_column_text]What is the approximate age of the owner\/s?
\n<\/span><\/strong>Note: Figures are presented in percentages<\/span><\/em>
\n<\/span><\/strong>[\/vc_column_text][vc_empty_space height=”10px”][vc_round_chart style=”custom” stroke_width=”2″ stroke_color=”grey” legend=”” values=”%5B%7B%22title%22%3A%2230-39%22%2C%22value%22%3A%228%22%2C%22color%22%3A%22blue%22%2C%22custom_color%22%3A%22%23003da5%22%7D%2C%7B%22title%22%3A%2240-49%22%2C%22value%22%3A%2220.16%22%2C%22color%22%3A%22grey%22%2C%22custom_color%22%3A%22%23ffcd00%22%7D%2C%7B%22title%22%3A%2250-59%22%2C%22value%22%3A%2228%22%2C%22color%22%3A%22pink%22%2C%22custom_color%22%3A%22%2369b3e7%22%7D%2C%7B%22title%22%3A%2260%2B%22%2C%22value%22%3A%2244%22%2C%22color%22%3A%22sky%22%2C%22custom_color%22%3A%22%23888b8d%22%7D%5D” css_animation=”none”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_column_text]\u00a0^ Back to top<\/a><\/span>[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” css=”.vc_custom_1654732708113{background-color: #f3f3f3 !important;}” el_id=”3″][vc_column][vc_column_text]2. Your key exit concerns<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_cta h2=”” shape=”square” color=”sky”]Key exit concerns among business owners remained similar to those we saw in our last survey in 2019 and were: receiving the desired sale price for the business; the business\u2019 reliance on its current owners; being able to find a buyer; and continued security of employment of staff.<\/span>[\/vc_cta][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”2\/3″][vc_column_text]Realising value<\/span><\/p>\n

Respondents were asked on a scale of one to five how concerned they would be about a number of factors if they were to sell their business, with one being ‘Unconcerned’ and five being ‘Highly concerned’.<\/p>\n

Over 50% of respondents were either ‘Concerned’ or ‘Highly concerned’ that they may not receive the desired sale price for their business, with a similar number being concerned that they would not be able to find a buyer. Most respondents are unlikely to know if their concerns are warranted, as 68% of respondents had not had their business valued in the last three years.<\/p>\n

Interestingly, given the high number of people expected to sell to a competitor, there appeared to be relatively limited concerns in relation to keeping business information confidential during a sale process.[\/vc_column_text][\/vc_column_inner][vc_column_inner width=”1\/3″][vc_column_text]Are you concerned about receiving your desired sale price for your business?\u00a0<\/span><\/strong>[\/vc_column_text][vc_empty_space height=”10px”][vc_single_image image=”11763″ img_size=”large” css_animation=”none”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner][vc_column_text]Working hours<\/span><\/span><\/p>\n

Another major concern was that the business was too reliant on the current owners.<\/p>\n

We share this concern, given that over 58% of the owners surveyed are still working more than 40 hours per week in their business.<\/p>\n

While it’s understandable that owners are working hard to make their business successful, these hours are likely to detract from business values. Buyers will not want to pay full value for a business if they are concerned that the business is still dependent on the incumbent owners.<\/p>\n

Business owners should start working on strategies to reduce the business’s reliance on them. A good way to demonstrate that the business is not too reliant on you is when you are able to take periods of extended leave without this having an adverse impact on results.[\/vc_column_text][vc_empty_space][vc_single_image image=”11764″ img_size=”full” alignment=”center” css_animation=”none”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_column_text]\u00a0^ Back to top<\/a><\/span>[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row el_id=”4″][vc_column][vc_column_text]3. Your wealth and retirement concerns<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_cta h2=”” shape=”square” color=”sky”]With life expectancy increasing, the need for a hefty sum in retirement to continue a preferred lifestyle is critical. Interestingly, 57% of our respondents expect retirement to be the reason they, and\/or other owners of the business, will exit. This is nearly triple those that said they planned to retire upon exit in our 2019 survey, which was 20%.\u00a0<\/span>[\/vc_cta][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/2″][vc_single_image image=”11765″ img_size=”full” css_animation=”none”][\/vc_column_inner][vc_column_inner width=”1\/2″][vc_column_text]Do you have an adequately funded retirement plan outside your business?<\/span><\/p>\n

Usually, small business owners have significantly less superannuation than others. This is because they are often not paying themselves superannuation or making voluntary contributions. Small business owners also tend to invest any profits that the business makes back into the business. The combination of these factors leads to many business owners being reliant on having to sell their business to fund their retirement.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/2″][vc_column_text]It was promising that the majority (60%) of our respondents believe that they have an adequately funded retirement plan outside their business.\u00a0 This is an improvement on our 2019 survey results which saw almost half of all respondents indicate that they did not have an adequately funded retirement plan.<\/p>\n

However, it still leaves a concerning number who are still likely to be reliant on their business to fund their retirement, particularly given the average age of the respondents and the fact that most plan to retire upon exit.[\/vc_column_text][\/vc_column_inner][vc_column_inner width=”1\/2″][vc_single_image image=”11766″ img_size=”large” css_animation=”none”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_column_text]\u00a0^ Back to top<\/a><\/span>[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” el_id=”5″ css=”.vc_custom_1629860437377{background-color: #f3f3f3 !important;}”][vc_column][vc_column_text]4. What are your plans to add value?<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_cta h2=”” shape=”square” color=”sky”]Maximising the value of a business requires a solid and well-executed strategy. We strongly recommend that business owners seek advice on what they can be doing to maximise the value of their business. In our experience, it is never too early to undertake exit planning, with some of the most successful business owners having planned their exit when first establishing their business.\u00a0<\/span>[\/vc_cta][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/2″][vc_column_text]Increasing business value<\/span><\/p>\n

With a growing number of business owners planning to exit in the coming years, improving the value of the business should be a high priority. However, only 34% of participants had sought advice on how they could maximise the value of their business. As the graph shows, there are a number of actions that can be undertaken to increase business value, however these are being underutilised by businesses.[\/vc_column_text][\/vc_column_inner][vc_column_inner width=”1\/2″][vc_column_text]Which actions are undertaken to grow and increase business value?
\n<\/b><\/span><\/span>Note: Figures are presented in percentages<\/span><\/em>
\n<\/span><\/strong>[\/vc_column_text][vc_empty_space height=”10px”][vc_line_chart style=”custom” legend=”” x_values=”Other; Legal review of contacts and or IP protection; Acquiring complementary businesses; Investing in innovation and R and D; None of the above; Tighter management of working capital; Expanding geographically; Developing strategic alliances; Digital growth strategy; Reducing costs; Adding products or entering new business lines; Improving systems” values=”%5B%7B%22title%22%3A%22One%22%2C%22y_values%22%3A%224%3B%2010%3B%2015%3B%2019%3B%2019%3B%2024%3B%2026%3B%2027%3B%2028%3B%2038%3B%2049%3B%2057%22%2C%22color%22%3A%22blue%22%2C%22custom_color%22%3A%22%23003da5%22%7D%5D” animation=”easeOutElastic” css_animation=”none”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/3″][vc_single_image image=”11767″ img_size=”medium” alignment=”center” css_animation=”none”][\/vc_column_inner][vc_column_inner width=”2\/3″][vc_column_text]Similar to the 2019 report, the key common actions being undertaken by business owners were improving systems, adding products and reducing costs.<\/p>\n

While more businesses are focused on digital growth strategies than in 2019, the majority are still not. It is currently estimated that 50% of businesses are currently affected by digital disruption, thus the value of many businesses may be eroded if they do not appropriately respond to changes in market dynamics.<\/p>\n

Three of the key drivers of higher business valuations are 1) the level of operating cashflow, 2) strong growth rates, and 3) lower risks. Therefore we recommend that business owners consider a range of growth strategies, focus on strong working capital management and seek to minimise any potential risk factors.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_column_text]\u00a0^ Back to top<\/a><\/span>[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row el_id=”6″][vc_column][vc_column_text]5. Tax minimisation<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_cta h2=”” shape=”square” color=”sky”]Given that the after-tax consideration received is more pertinent to the business owner than the pre-tax consideration figure, we strongly recommend that business owners seek advice on how best to structure their business as part of their exit planning.\u00a0<\/span>[\/vc_cta][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”2\/3″][vc_column_text]Have you ever sought advice on how to restructure your business to maximise the after sale-tax value?<\/span><\/p>\n

Only 21% of respondents indicated that they had sought advice on how to restructure their affairs to maximise the after-tax value of the consideration from the sale of their business. Thus, many business owners may end up with significantly less after-tax returns from their business purely because they are not aware of some of the tax savings that may potentially be available to them.<\/p>\n

These potential tax savings need to be planned – another reason why we strongly recommend that you receive professional advice years before you actually plan to exit.[\/vc_column_text][\/vc_column_inner][vc_column_inner width=”1\/3″][vc_column_text]Have you ever sought advice on how to restructure your business?
\n<\/b><\/span><\/span>Note: Figures are presented in percentages<\/span><\/em>
\n<\/span><\/strong>[\/vc_column_text][vc_empty_space height=”10px”][vc_round_chart style=”custom” stroke_width=”2″ legend=”” values=”%5B%7B%22title%22%3A%22Yes%20%22%2C%22value%22%3A%2221%22%2C%22color%22%3A%22blue%22%2C%22custom_color%22%3A%22%23003da5%22%7D%2C%7B%22title%22%3A%22No%22%2C%22value%22%3A%2271%22%2C%22color%22%3A%22pink%22%2C%22custom_color%22%3A%22%23ffcd00%22%7D%2C%7B%22title%22%3A%22Unsure%22%2C%22value%22%3A%228%22%2C%22color%22%3A%22pink%22%2C%22custom_color%22%3A%22%23f4f4f4%22%7D%5D” css_animation=”none”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”20px”][vc_separator][vc_empty_space height=”20px”][vc_column_text]\u00a0^ Back to top<\/a><\/span>[\/vc_column_text][vc_empty_space height=”20px”][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” css=”.vc_custom_1629771805904{background-color: #f3f3f3 !important;}” el_id=”7″][vc_column][vc_column_text]6. When do you plan to exit?<\/span>[\/vc_column_text][vc_empty_space height=”20px”][vc_cta h2=”” shape=”square” color=”sky”]Unlike the results of our 2019 survey which demonstrated that the majority of respondents were expecting to retire when they exited the business, only 30% of respondents answered this way in our recent survey. However, this was still the most common trigger for an exit. This makes it even more important that they properly plan for their exit, so as to help ensure their financial security at retirement.\u00a0<\/span>[\/vc_cta][vc_separator][vc_empty_space height=”20px”][vc_row_inner][vc_column_inner width=”1\/3″][vc_column_text]Does your business currently have an exit strategy in place?
\n<\/span><\/strong>Note: Figures are presented in percentages<\/span><\/em><\/span>
\n<\/span><\/strong>[\/vc_column_text][vc_empty_space height=”10px”][vc_round_chart style=”custom” stroke_width=”2″ stroke_color=”grey” legend=”” values=”%5B%7B%22title%22%3A%22Yes%22%2C%22value%22%3A%2234%22%2C%22color%22%3A%22blue%22%2C%22custom_color%22%3A%22%23ffcd00%22%7D%2C%7B%22title%22%3A%22No%22%2C%22value%22%3A%2255%22%2C%22color%22%3A%22pink%22%2C%22custom_color%22%3A%22%2369b3e7%22%7D%2C%7B%22title%22%3A%22Unsure%22%2C%22value%22%3A%2211%22%2C%22color%22%3A%22pink%22%2C%22custom_color%22%3A%22%23888b8d%22%7D%5D” css_animation=”none”][\/vc_column_inner][vc_column_inner width=”2\/3″][vc_column_text]Exit readiness<\/span><\/p>\n