25% of SME owners plan to sell, but for how much?

   

One quarter of the nation’s small to medium-sized business entrepreneurs plan to throw in the towel and sell-up in the next three years. But almost half these people have no real idea what their business is worth, according to research by the Tenon Forum, an independent think tank of entrepreneurs.

Of the 92,000 businesses expected to go up for sale, a surprising 47 per cent (43,000) have owners with no clear picture of what their business is worth. The same spectrum of businesses with between five and 499 employees was asked whether they had an exit strategy in place. Only 52 per cent of these businesses had one.

The bi-annual research, conducted by GfK NOP on behalf of leading accountants and business advisors Tenon, questioned managing directors, financial directors and senior directors of 500 small and medium-sized businesses.

SMEs from a broad spectrum of sectors, including manufacturing, retail, agricultural and construction were asked about their future plans. The findings were particularly stark among smaller companies with a workforce of five to nine employees, of whom 32 per cent hope to sell but only 37 per cent have any idea of what their business is worth.

Equally, businesses in the retail, leisure and utilities industries seem to be in the mood to sell. A significant 32 per cent of these businesses plan to sell up in the next three years. Of these, only 42 per cent have an exit strategy in place and only half have an accurate notion of their company’s financial worth.

The picture was more positive among larger companies with between 200 and 499 employees. There only 12 per cent expected to sell and of those, eight in 10 said they had a good idea of their financial worth.