Third of UK Medium-Sized Businesses Plan to Sell Up Instead of Scale Up
Mid-market business owners feel “forced” to exit their business with majority hoping to sell by April 2017
One third (33%) of mid-market business owners are actively preparing to exit their company, with 51% expecting to sell within the next two years, according to a report from law firm Mills & Reeve.
The research, which featured 500 medium-sized companies found that 29% of respondents are planning to to sell their company because they feel “forced” to do so.
Over half of the mid-market firms surveyed(55%) admitted to being approached by investors with 39% having expressed concerns about missing “the boat” on deal activity if they do not sell now. A worrying 34% of medium-sized businesses said they fear they will exit too soon before the company achieves its full potential.
The majority of businesses owners believe that growing a company rather than selling is better for the economy and 63% are apprehensive about the country’s economic health as more fast-growth businesses are sold rather than scaled in the UK – with 43% stating that this is detrimental to the economy.
However business leaders admit that although scaling a company may be better for the economy, 44% feel that it has never been harder to do so.
The recession still appears to have had an impact on the aspirations of business owners; 48% have a strategy in place that shifts their plans from growth to survival if the economy shows any signs of faltering and 40% are choosing to exit as it involves less risk.
Claire Clarke, partner at Mills & Reeve, commented on the report:
“The mid-market currently accounts for a quarter of the UK’s turnover. Not only is this stalwart of the economy capable of delivering even more growth and jobs; from its ranks will emerge Britain’s next generation of world-leading large enterprises.
“While selling may be the right choice for some companies, scaling up can, with the right support, offer greater returns for business owners, shareholders and the UK economy as a whole.”
For information on why business owners should consider scaling instead of exiting, check out Sherry Coutu’s scale-up report here.