Why do sellers sell?
Stories behind the stats
As part of our market intelligence activities, BCMS profiles our clients’ reasons for selling a business. The results are fascinating, and show the multiple different trigger points business owners experience. Top of the list, cited by 26% of all BCMS clients, are ‘lifestyle and family reasons’. This is a broad term for the desire to change work/life balance for the better, and can encompass a host of different factors, including the urge to take time out to travel, pursue new interests, or simply spend more time with loved ones.
Retirement is another key issue for BCMS clients, with one quarter of all clients naming this as the chief motive for seeking an acquirer or investor. Historically, retirement was the top reason for BCMS clients. But in the past few years, the average age of business owners seeking a sale has dropped from traditional retirement age to around 53. Early indications on statistical analysis for 2017 suggest this is falling further to 52 – by anyone’s standards a young age to quit work altogether. Interestingly, only 8% of clients who sold with BCMS in 2016 were aged over 65.
This is why we are seeing an increase in other key categories: 12% of business owners claim their chief reason for seeking a business sale is to explore other, separate business interests or commercial opportunities that they wish to consider more fully. We have also found that 17% have actually grown their business with a specific sale event in mind, and that timing – maybe a regulatory change, consolidation in their market – is the chief driver in their decision-making.
One thing that is hard-wired in many BCMS clients is the entrepreneurial spirit, and we represent many business owners who value the thrill of starting and growing a business over the day-to-day administration of running a larger enterprise. It’s a generalisation, of course, but many entrepreneurs simply do not excel in a ‘red tape’ environment – and this is at the heart of another key reason for sale.
The best way to understand why sellers sell, of course, is to talk to them face to face, and learn from them. These are themes we are exploring at our acclaimed evening panel events as well as at our brand new free webinar series for 2017, where former BCMS clients talk through their decision-making process, and share their first-hand experiences. In fact the first webinar event – Mythbusting: Understanding M&A Jargon – was suggested by one former client, who like many embarking on a business sale for the first time felt he did not fully understand the wide range of technical terminology used by many in corporate finance.
Having been through a successful sale, these people are by far the best placed to articulate the range of emotional and commercial pressures business owners face – and, as such, they’re a great first port of call if you’re looking to explore your options in 2017.