Retirement plans among small business owners are fuelling a growing wave of business sales and acquisitions, according to new research from SME funding provider Asset Advantage.
Almost seven in 10 commercial finance brokers (69%) said that retirement or plans to step back were the main reasons behind owners choosing to sell, underscoring an emerging trend of ownership transition across the UK’s small and medium-sized business sector.
The survey, carried out by Asset Advantage, also found that just under half of brokers (46%) cited business owners’ desire to cash out and realise the value they have built as a key factor driving sales.
A further one in five brokers said that owners were exiting due to rising costs, with some reacting to increases in National Insurance contributions, higher wages and other operational pressures.
Only 9% of brokers said their clients were motivated by concerns over changes to employment law or other regulatory reforms.
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The findings form part of Asset Advantage’s latest commercial broker survey, which explores trends in business acquisition activity, funding needs and sector demand across the market.
Asset Advantage, which has operated in the SME funding sector for nearly 20 years, began as an asset finance provider before expanding into business loans of up to £1 million in 2014. Its loans are often used to support business acquisitions, management buy-outs and management buy-ins, with funding starting from £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.”
He added: “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 we may see that trend increase depending on the outcome of the upcoming Budget.
“For others, it’s less about retirement and more about timing – deciding now is the moment to realise the value they’ve created.”
Thompson said that business acquisition funding is likely to remain a key area of demand in the coming years as ownership transitions continue across the SME landscape.
