There is always a lot of conversation about starting a business – the ‘start-up’. However, there is less discussion about what happens at the other end.
In our 2023 Global Entrepreneurial Wealth Report we asked 848 current entrepreneurs about their intentions around a business exit, and 125 former business owners from across the globe about their actual experience of exiting, either by handing it down or selling it. They tell us that they wish they had consulted more with their families, understood the value of their company better, and started business and personal wealth preparations sooner*.
Their guidance to current entrepreneurs considering the sale or transfer of a business would be to avoid the mistakes they made by fully understanding the exit or transition process, and to start planning as early as possible.
Understand your exit route
Transferring ownership within the family is the most common route to exit, with 51% planning to transfer to the next generation or another family member. Over a third (34%) are planning to sell to a third party, but that is split between those looking to sell to management or employees (6%), those seeking a partial sale (13%) and an outright sale (15%). A further 15% are still undecided.
For those planning to sell, finding a suitable buyer is their top priority. But it’s also clear that entrepreneurs have other, more personal, signposts for knowing when the time is right – such as no longer enjoying their role or reaching a certain age. For those planning to transfer, they are focused on readiness of the next generation (70%).
Fail to plan, plan to fail
Your next chapter
Don’t wait until after an exit to start thinking about your other business interests, hobbies or even passion projects. Often there’s a sense of loss after the sale or transfer of a company, so having something to jump into can be a welcome distraction. The support of your family is crucial at this time, so involving them at the planning stage means they’ll be aware of what’s to come – meaning they can be on hand to help you enjoy your next chapter.
*We surveyed 973 entrepreneurs across 9 markets with investible assets of USD2-100m+ to understand their priorities, concerns and plans in three key areas: international opportunities, the path to business exit and beyond, and the transfer of wealth through generations. This includes 95 UHNW individuals with investible assets of USD20-100m+.
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