Owners of UK family businesses are increasingly opting to sell their business rather than pass it on to the next generation, reveals a recent study by accountants KPMG.
The firm surveyed 100 medium-sized UK family and owner-managed businesses, and found that while a quarter of all current family business owners said that succession to family members would be their preferred exit option, not one of those who had actually sold their business opted for this route, with 63 percent selling to a trade competitor.
Furthermore, the study showed high levels of satisfaction among ex-family business owners who had decided to sell up when compared to ex-owner managers. 84 percent felt that they had received a good price for their business, compared with 69 percent of ex-owner managers, and three-quarters said that they would not consider taking the business back. When asked if they missed their business, the number ex-owner managers who said yes (14%) was almost double that of ex-family business owners (8%).
Adrian Dray, a partner at KPMG corporate finance, commented on the findings: Whilst emotion is part of all of our lives, at critical junctures in the lifecycle of a business it is important to keep a clear, commercial head. Our research dispels the stereotype of the emotionally-attached family business leader. In my experience, sellers are often excited to move onto the next phase of their business life."
Dray also attributed the small numbers who appeared to miss their business to the tendency for an increasing number of sellers to remain involved in their business in some capacity after the sale. "Once free of the burden of ownership and financially assured of the sale, many former owners are happy to retain some interest in the business going forward. This may partly explain why so few experience the post-sale blues."
The study also highlighted some interesting attitudes towards the timing of a sale. While the majority (59%) of all those surveyed claimed that they would need a one to three year timeframe to prepare their business for sale, 52 percent of all current owners also said that they would be open to a tempting offer for their business if one came along today, despite the fact that this would leave them with a much shorter timeframe in which to value the business and make a decision. This was borne out by the responses of those who had already sold their business, which showed that receiving a tempting offer was the most popular reason given for the sale, closely followed by the business reaching a level of financial maturity.
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