SME owners must engage 'exit planning', says William Buck

Over the next 10 years, more than three-quarters of business owners expect to leave their businesses but less than half have a specific plan.

William Buck’s most recent version of the Exit Smart Report also found two-thirds of businesses hadn’t valued their business recently, despite more than 75 per cent planning their future exit.

The report, based on an extensive survey of business owners from a wide range of industries, also found more than 40 per cent were concerned about receiving their desired sale price.

William Buck head of corporate finance, Mark Calvetti, said the results highlighted the fact that business owners were likely losing money when selling their businesses.

“Exit planning is key to ensuring that a business is in the best position to go to market. So, the fact that only three in 10 have had their business valued in the last three years is quite alarming,” he said.

“Most business owners can alleviate their biggest concern when selling and receive their desired price by planning ahead. In our experience, the most successful business exits are planned well in advance.”

William Buck noted the report also revealed that close to 40 per cent of business owners had substantial concerns about finding a suitable buyer for their business, while 40 per cent said the business was heavily reliant on its current owners.

Close to 50 per cent of the surveyed business owners said they thought retirement would trigger their exit from their businesses and nearly 60 per cent had concerns about adequate funding for their post-retirement funding.

Calvetti said planning a business exit in the long term would allow owners to consider a business’s value, improve its performance and maximise the proceeds from the sale.

“While close to half the business owners we interviewed would like to retire and even more have considered what their lifestyle looks like after exiting their business, it is concerning that nearly two-thirds have not had their business valued in the last three years,” he said.

“This suggests that most businesses are not positioned to exit successfully. I think it’s key for business owners to start planning for their exits at least three to five years before they expect to exit.”