As many as a third of small business owners could be ready to hang up their hats in the next five years, as economic conditions finally look more favourable for those that want to sell up.
According to research by Moore Stephens, 32% of SME owners are planning to retire, sell or pass on their businesses within the next five years. However, many do not have clear plans for managing business succession.
The large number of potential retirees includes many owners who could not sell their companies during the recession and subsequent years of slow economic growth, it says.
However, the survey has found that 48% of business owners are uncertain what type of purchaser could be targeted. Selling out to a UK-based rival is the most popular strategy but even so, 44% of business owners said they would never consider selling to UK rivals.
In fact, the research shows that many of the exit options are seen as undesirable by business owners, with 58% saying they would not consider a management buy-out and 72% ruling out sale to a family member.
Debbie Clarke, head of M&A at Moore Stephens, said: "A large proportion of SME owners have a fairly short exit horizon in mind, with a substantial majority looking to retire, sell out or pass their businesses on to others in just a few years. That would suggest a huge transition in ownership of owner-managed businesses.
"Business owners looking to exit in the medium term owe it to themselves to fully understand all the options in front of them when planning their exits. Our view is that while a lot of SME owners have the goal of exiting in the next five years, not enough have yet done their due diligence on their broad options."
Clarke also notes that the tradition of family businesses does not seem to be as strong as it once was. "That's probably driven by the desire to get the best price possible," she said.