Owners underestimate the amount of time it requires to sell their businesses, it has been claimed.
Research carried out by Coutts, the private bank, revealed that many entrepreneurs who sell their businesses lack a well-prepared exit strategy.
Almost half of those owners who took part in the survey (46 per cent) believed that it needs less than 12 month to sell a business, when the average time for the transaction to be completed is up to two years.
Some 59 per cent of entrepreneurs did not have adequate financial planning in place until the very last stages, this despite the fact that four out of five admitted it is a central part of the process.
Prior to a sale, 28 per cent of owners listed the price offered as the most important consideration, with the readiness of the business (17 per cent), market conditions (7 per cent), the long-term security of the business (4 per cent) and a fast exit (2 per cent) following.
After the sale, however, attitudes changed, with 36 per cent prioritising price, 15 per cent the long-term security of the business and 12 per cent a speedy transaction.
Andrew Haigh, managing partner for Coutts’ Entrepreneurs Client Group, commented: “This report has shown that, alarmingly, two-thirds of entrepreneurs are risking long-term business success by not giving proper thought to their exit strategies.
“While planning for this exit may not seem an obvious priority for owner managers in today’s difficult market, the buyout industry will eventually open up, merger and acquisition activity will increase, as will private equity investment. Therefore it is essential that entrepreneurs and businesses start planning if they’re looking to take advantage of an economic upturn in the future.”
