Nearly half of polled entrepreneurs believe that selling their business will take less than one year, whereas in reality it turns out to be two, research by
Coutts & Co, the UK private banking arm of the Royal Bank of Scotland, has revealed.

The research, entitled The Long Goodbye: Myths, realities and insights into the business exit process, shows that pre-exit, entrepreneurs focus mostly on price (28 per cent); readiness of the business (17 per cent); a cash exit (11 per cent); market conditions (7 per cent); long-term security of the business (4 per cent) and a fast exit (2 per cent).

Afterwards, however, this changes significantly: for 36 per cent, the price becomes more important, as does long-term security of the business (15 per cent) and a fast exit (12 per cent).

This shows that, apart from the price, a fast exit and the long-term survival of the company also increase significantly in importance throughout the process of selling the company, Coutts concluded.

The research also revealed that on the day of the actual sale, only 36 per cent of entrepreneurs felt elated or happy, 32 per cent were relieved and 26 per cent were filled with tiredness, sadness or anti-climax.

After selling their business, one in four entrepreneurs retire early, while 40 per cent start another enterprise. At the same time, more than half remain directly involved in the company they have sold.

Half of all participants questioned said that their best advice to those selling their company is to get the right advisors on board.

“This report has shown that alarmingly, two-thirds of entrepreneurs are risking long-term business success by not giving proper thought to their exit strategies,” said Andrew Haigh, managing partner for Coutts’ entrepreneurs client group.

“But in today’s difficult market, while planning for this exit may not seem an obvious priority for owner managers, the buyout industry will eventually open up, merger and acquisition activity will increase, as will private equity investment, therefore it is essential that entrepreneurs and businesses start planning if they’re looking to take advantage of an economic upturn in the future,” he said.

The research consisted of three phases: quantitative research from a random selection of 127 UK entrepreneurial respondents; qualitative research from three separate focus groups, and in-depth interviews with 12 entrepreneurs and academics with direct experience of the exit process based on the findings of the results.

Of the 127 respondents, 43 per cent of the respondents were pre-exit while 57 per cent were post-exit.