One in five owners at small and medium-sized businesses (SMEs) are planning to sell all or part of their business within the next two years, a study has found. Owners polled cited a range of challenges, including rising costs and profitability issues, as well as positive reasons for selling, such as releasing liquidity for another venture.
The study, conducted on behalf of Handelsbanken Wealth & Asset Management, found that 20 per cent of SME owners are planning some form of disposal, although just 6 per cent are planning a full sale within two years, with rising costs and profitability concerns featuring in many owners’ thoughts.
However, 40 per cent of those planning a full or partial sale were motivated by a desire to release liquidity to invest in another business venture. 20 per cent, meanwhile, cited retirement as a factor in their sale plans and a further 20 per cent said they were seeking a sale due to an absence of succession options within their family.
Slightly over one in ten owners (11 per cent), meanwhile, said they expected to downsize their business in the coming two years, with 18 per cent citing performance-related issues and 15 per cent seeking to release liquidity as a result of the UK’s cost-of-living crisis.
While SME owners face a range of challenges, 52 per cent of those polled said they had no plans to change their company’s size or ownership status, while 16 per cent said that they were considering scaling up their operations over the next two years.
Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth & Asset Management, said: “Making changes to your business – whether you’re expanding, downsizing, selling or starting something new – can be a very exciting time, but it can also be very stressful. If you’re releasing money from your business by selling all or part of it, it can feel like a big weight off your mind when the process is finally concluded. However, there’s also the question of what to do with the proceeds of a business sale, as you enter the next chapter of your life.”
“This is a good time to take stock of your situation, and focus on your goals for the future. It’s important to remember that many of the tax advantages you enjoyed as a business owner may no longer be available to you, so consider taking professional advice as early as possible to help work out the best options for you.”
“For example, setting up a family trust prior to your business sale could make use of inheritance tax reliefs, if this meets your financial and estate planning objectives. You might also want to make the most of allowances around ‘gifting’ money to help the next generation, if it suits your personal situation, or invest in financial markets an effort to protect the value of your capital against inflation. Whatever you choose to do next, make sure you understand the risks and potential rewards involved.”
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