""

Business Exits Report -

Unfolding the Key to Success

Arbuthnot Latham is a proud champion of entrepreneurship and the many benefits it brings to our economy and communities. Our teams work in partnership with entrepreneurs and are embedded in the entrepreneurial ecosystem of the UK.

Welcome to our Unfolding the Key to Success report, which focuses on UK entrepreneurs – the people who make business happen, create jobs and generate wealth.

With Unfolding the Key to Success, we aim to shine a light on the myriad factors influencing entrepreneurs at different stages of their journeys. Whether a natural progression from an entrepreneurial family background, or a desire to move out of the corporate world, everyone has their own story to tell.

From inception to exit, we explore the experiences that define business founders and uncover the motivations that shape their ambitions at various stages of their entrepreneurial journeys.

We hope you enjoy the report.

Our key findings

1. Entrepreneurs consult a diverse ecosystem of trusted advisors

A business exit has important implications for entrepreneurs’ personal wealth and lives beyond – and those who have exited are approximately 7 times more likely to involve a private banker in the process than those who are yet to exit (29% vs 4% respectively). Despite strong intentions, only 19% say they had a plan in place to protect their wealth post-exit.

 

2. There is a disconnect between expectation and reality when it comes to business exits

Entrepreneurs anticipate that when the time comes, the decision to leave their business will be personal – perhaps because they have reached a certain age or have stopped enjoying their role. In reality, they often end up exiting more pragmatically, because they have found a suitable successor to take their place.

Origami swan
Origami unicorn

3. There is no such thing as a perfect exit process

Only 22% of entrepreneurs reported that they were perfectly happy with the way the business exit process went. 3 in 5 (59%) would have sold later or earlier; with others identifying factors such as finding the right buyer and gaining a better understanding of the risks involved as key considerations.

 

4. Prior to an exit, founders usually believe they are stepping away for good

Yet 83% remain connected to their firms in some way – most commonly, as advisors or Non-Executive Directors. Almost two-thirds perceive this continued involvement to be stabilising for their former firms in the long-run.

Origami ship

5. Most business founders do not retire in the traditional sense

92% continue their involvement with the business world in some capacity. The quest for time remains elusive, as many find themselves channelling their expertise and capital into mentoring, angel investments and philanthropy.

This is required

How do you compare?

This is required

1. Do you consider your business part of your overall investment strategy?

This is required

This is required

This is required

You are in good company. 60% of HNW UK entrepreneurs agree, climbing to 72% when those entrepreneurs come from a family business background.

This is required

You carve your own path. Only 17% of entrepreneurs chose this option, reducing to 12% of those who come from a family business background.

This is required

Are you a first time entrepreneur? 35% of first time entrepreneurs view their business as distinct compared to only 16% of entrepreneurs from a family background.

This is required

2. Thinking about your personal motivations, which of these best describes why you became an entrepreneur/business owner?

This is required

This is required

This is required

This is required

This was the most popular option among the entrepreneurs we surveyed too, with 23% stating this was a key motivation.

This is required

For many, the desire to move away from the corporate world was as strong pull with almost 1 in 5 choosing this option (17%).

This is required

Providing for others was a key motivator with 15% of entrepreneurs putting the needs of their loved ones first.

This is required

Entrepreneurs are certainly not short of passion, with 10% of entrepreneurs motivated by following their dreams.

This is required

3. What activities do you/did you anticipate undertaking to prepare the business for an eventual transfer of ownership?

This is required

This is required

This is required

This is required

This is required

This is required

Interestingly, almost twice as many entrepreneurs intended to put a plan in place (37%) compared to those that did in reality (19%).

This is required

Timing is seen as key with half of entrepreneurs who exited identifying this as a key element (49%). However, 27% and 23% respectively said they would have waited longer or sold earlier.

This is required

Valuation is understandably a key factor; 35% of those yet to exit identified this as important, rising to 52% of those who have exited.

This is required

We found entrepreneurs had solid intentions to put wealth protection plans in place (35% of those yet to exit), however only 13% managed to do this.

This is required

Restructuring is seen as a key activity by more than a quarter of entrepreneurs who have gone through this process (27%).

This is required

Interestingly, double the number of those who have exited their business refinanced in preparation of sale (31%), compared to those yet to sell (15%).

This is required

4. Which of the following business roles do you anticipate being involved in after you have exited your business?

This is required

This is required

This is required

This is required

2 in 5 (43%) entrepreneurs intended to cut the cord, yet it’s easier said than done with 92% of entrepreneurs remaining connected post-exit.

This is required

About a quarter (28%) of entrepreneurs anticipated mentoring, yet 2 in 5 (44%) provide this service post exit.

This is required

Only 1 in 5 (20%) entrepreneurs anticipated taking on a C-Suite role in another company, yet almost half (47%) made this move post-exit.

This is required

Despite relatively low expectations of investing into another business (18%), 30% of entrepreneurs became angel investors.  Read the report to find out how successful they were.

This is required

Author -

Paul Beach

Paul Beach

Director, Head of Executives and Entrepreneurs, Arbuthnot Latham

Being passionate about entrepreneurship, I am proud to lead the Executives & Entrepreneurs Team at Arbuthnot Latham. We aspire to preserve and grow your wealth through long-term planning and proactivity.