Plans to retire or step back are the primary motives for business owners looking to sell as part of business acquisition deals, commercial finance brokers have told SME funding provider Asset Advantage.
When asked what are the main reasons why business owners are looking to sell, nearly seven in ten commercial finance brokers (69%) said retirement or plans to step back – highlighting a growing wave of ownership transitions.
Just under half (46%) said the main reason is business owners who have a desire to cash out and realise any value they have generated. Meanwhile, one in five commercial brokers said that business owners are exiting due to rising costs, responding to changes to the likes of National Insurance contributions for employers, wage increases or other business costs.
Only 9% of brokers shared concerns from business owners over changes to employment law or other regulatory changes on the horizon.
The findings are revealed by Asset Advantage, a leading independent provider of asset finance and business loans to UK SMEs, as part of their latest commercial broker survey. Alongside business acquisition activity and trends, the survey questions brokers on current funding needs, funder appetite and in-demand sectors to assess the current and future landscape of the commercial finance market.
Asset Advantage has been operating in the market for nearly two decades, first as a trusted provider of asset finance and later business loans of up to £1 million. Launched in 2014, business loans are primarily used to fund business acquisitions, management buy-outs (MBOs) and management buy-ins (MBIs), with loans starting at £75,000.
Gary Thompson, sales director at Asset Advantage, said: “While it may be easy to draw conclusions from the current economic or political climate, our data suggests that retirement still remains the primary motive for business owners to sell. As these experienced owners look to depart and hand over the baton, it will reshape the ownership landscape within UK SMEs and drive demand for both specialist advice and flexible funding. To facilitate these deals, funders have to be present and proactive, with an appetite for growth and expansion-based lending and importantly, an open-minded approach.
“In some cases, higher costs may be accelerating exit decisions by older business owners and something we may see increase based on the outcome of the upcoming Budget. For others though, it’s less about retirement and more about timing – deciding now is the moment to realise the value they’ve created. Whether it’s driven by business owners or by their existing management teams, our data tells us that there is real demand for business acquisition funding, which is likely to be a consistent theme over the coming years.”
