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A study conducted for Handelsbanken Wealth & Asset Management has found that one in five SME business owners plan to sell all or part of their business within the next two years.
The survey also found a further 11% will seek to downsize during the same period.
Of those considering sale or reducing their activities, a third (31%) blame rising costs, 18% cite performance-related issues and a further one in six (15%) need to release liquidity to deal with the cost-of-living crisis.
While rising costs and profitability were among some of the catalysts for selling up or making a change, SME owners were also being motivated to sell for positive reasons, Handelsbanken found. 40% plan to release liquidity to invest in other business ventures, while a fifth of those looking to sell up entirely cited retirement as a main factor.
Despite the multiple challenges faced by many SMEs, most company owners (52%) have no plans to change their firm’s size or ownership status. Furthermore, one in six (16%) are considering scaling up their operations within the next two years, indicating a welcome degree of optimism among this business segment.
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.”
The Handelbanken study was carried out independent research company Pure Profile among a nationally representative sample of 100 UK SME owners, surveyed between 23 August 2023 and 25 August 2023.