More Scots entrepreneurs planning their exit strategies

ALMOST two thirds of Scottish entrepreneurs are hoping to sell their business in the next five years, the findings of a new survey suggest.

The research by Deloitte reveals that the number of business owners looking for an exit has rocketed to 63 per cent, from 28 per cent 12 months ago.

The accountancy firm said “a significant boost in optimism” for the economic outlook was behind the change, with entrepreneurs looking to cash in on the value of their firm.

However, the results also reveal more than 42 per cent of those business owners have yet to plan an exit strategy.

Jim Boyle, head of entrepreneurial business at Deloitte, said: “While last year there remained a great deal of uncertainty among business owners around the economic recovery and the threat of a double dip, this year’s survey reflects a more positive medium-term outlook with the majority of owners stating their intention to sell up within five years.”

The exit route of choice was shown to be a trade sale, favoured by 46 per cent of business owners, followed by an initial public offering and a management buy-out, preferred by 7 per cent and 5 per cent respectively.

Boyle added: “A carefully planned exit strategy is essential to ensure entrepreneurs maximise the value derived from the sale of their business and should be considered around five years before the intended time of exit.”

In addition, 46 per cent of those surveyed claimed the recession had impacted their exit plans, compared with 28 per cent in 2010.

Andy Willox, the Federation of Small Businesses’ Scottish policy convenor, said that while the last few years had certainly been testing for people that run their own businesses, he had seen no evidence of a recent spike in optimism.

He added: “The sale of one business doesn’t necessarily mean the end of a person’s career. Many of our members have a stake in more than one business or may have plans for another.”

Another report, published today by RSM Tenon, shows more than seven out of ten entrepreneurs believe that a lack of bank funding is the major problem holding back small business growth in the UK.

But the study also showed there were signs that new funding models were coming into the marketplace. Nearly a quarter of those surveyed thought that equity investors and business angels were more willing to offer funding than twelve months ago.

RSM Tenon chief executive Andy Raynor said new funding sources were good news, but they could not replace banks. “If you want entrepreneurs to create jobs they have to have access to funding,” he added.