SMEs in state of flux: One in three owners plan to sell by 2027

• This is compared to one in five SME owners surveyed in 2023 – a substantial increase
• New study reveals 15% expect to downsize their company, while 34% intend to expand it (double last year), highlighting dynamism and continued mixed sentiment among the UK’s dominant business community

New independent research conducted on behalf of Handelsbanken Wealth & Asset Management reveals a significant year-on-year increase in the number of entrepreneurs looking to sell their business.

According to the study, almost a third (30%) of SME owners plan to sell part or all of their business within the next two years, up from one in five (20%) just 12 months ago.

Of those planning to sell their whole business (7%), the main reasons are to pursue other interests, deal with health and personal issues (both 43%), and because they have received an offer they can’t refuse (29%). This is in contrast to last year, when retirement and a lack of family succession options were the primary motivators.

For those selling part of their business (23%), pursing other interests and health and personal issues were also the main triggers, as well as the rising costs associated with running a business (all at 48%). Additionally, 30% cited the need to release liquidity for other ventures – which was selected by the majority (40%) of respondents last year – or to address cost-of-living pressures.

Those downsizing (15%) overwhelmingly cited performance-related issues as the primary reason (73%). In 2023, 11% were considering downsizing, with the primary reason being the rising cost of running the business (25%).

Despite the multiple challenges faced by business owners, over a third (34%) intend to scale up their operations within the next two years, revealing a welcome degree of optimism and confidence for the future among this business segment.

Just a fifth (21%) of respondents say their plans remain unchanged, a significant drop from the 52% last year, indicating that the current climate is prompting many to reconsider their strategies.Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth & Asset Management said:

“Given the level of speculation ahead of the tax changes that may be announced at the upcoming Autumn Budget, it’s understandable that more business owners will be reviewing their options.  While it’s encouraging that over a third are planning to double down on growing their business, current sentiment suggests that the pace of part and full exits will pick up.

“For business owners contemplating any significant change – whether it’s selling, downsizing or expanding – early planning is paramount, and professional advice should be sought to navigate these transitions effectively.”