Quarter of UK SME Owners Considering Sale Over Next 3 Years

Recent research by the Tenon Forum, a think tank made up of leading entrepreneurs from the UK's business community, has indicated that over a quarter of Britain's small to medium sized companies could be up for sale over the next three years. The study interviewed managing directors, finance directors and other senior directors of companies with between 5 and 499 employees in England, Scotland and Wales, and found that 15% of these business owners were definitely considering selling their company while a further 13% wouldn't rule it out. Keenest to sell were those in the retail, leisure and utilities sector, while those in the agriculture, mining and fishing industries displayed the least inclination, with just 4% of owners considering a sale.

The research also unearthed a worrying trend that could lead to a dearth of both human resources and capital for business in the future. When those considering a sale were asked how much of the proceeds they would be prepared to invest in another business, two-thirds of respondents said none at all, with just 14% saying they would invest half or more. Furthermore, half of all business leaders surveyed revealed that they would not wish to get actively involved in another business once they had sold their own. Of those who would, 19% would reject a hands-on managerial role, preferring a backseat position. If true, this could leave younger companies with high growth potential struggling to find the resources to achieve it. However, the think tank analysts questioned whether these statistics would be realised, and predicted that the complexities of actually selling their business would leave exit intentions as a general aspiration rather than a concrete reality for many. In addition, experts warned that an inadequate valuation and lack of understanding of a business's worth could have heavy financial implications post-sale.


As always, there were some strong varieties in the response between the different sectors. Manufacturers proved to be the most committed to their industry, with three quarters wishing to stay in business in some capacity after the sale of their own. Owner-managers in this industry would also invest the most capital into another business: 54% claim they would reinvest at least part of what they earned from a sale, compared with only 12% of the construction industry.


Meanwhile, the general level of business confidence in the UK is rising after a dip towards the end of 2005, with 78% of those surveyed reporting that they feel positive about the next six months. Construction, financial and business services and the manufacturing industry proved to be the most optimistic, with 93% and 80% of owner managers respectively in these sectors expecting positive results. The most pessimistic industry continues to be transport and communications, with 29% predicting negative prospects.


Regionally, there are opposing trends in place, with the North and the Midlands showing a slight decrease in business confidence whereas London and the South West have gained. This could be due in part to the effect of the 2012 Olympics on London and the South East, while the South West continues to reap the rewards from government investment in the regeneration of cities such as Cardiff and Bristol.

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