The Last Word Comment
On hold
Business succession plans have been put into abeyance due to the pandemic
Chirag Shah Chief executive officer, Nucleus Commercial Finance
SMEs across the UK have had to tear up business succession plans due to COVID- 19, according to our research. Prior to the pandemic, over a third (35%) of SMEs had hopes of selling their business in the next two years, but these have been significantly impacted with many having to shelve their plans. Of those who were looking to sell their
business, a quarter (25%) have put plans on hold because their finances have been negatively impacted, while a fifth (21%) have stalled because the value of the business is not what it was prior to COVID-19.
Pausing By contrast, one in five SMEs (20%) have paused the sale because the business is now performing better than it was before the COVID-19 outbreak. The research also revealed that SME
owners have no desire to step away from the business post-sale. Nearly seven in 10 (68%) of those who were hoping to sell still had plans to be involved in the business after the sale. Selling to a competitor and remaining at
the business was the most popular option (23%), while over one in 10 (13%) want to sell to a family member and continue involvement. On the other hand, just under a third
(31%) plan to have no involvement in the future once they reach a point of sale.
Reasons for taking out external finance Product development
Make new hires
Invest in new technology Purchase new equipment Purchase new property
50
48% 44% 33% 22% 11%
www.CCRMagazine.com
Reaching the point of sale For those who are pausing the sale of their business, the average delay is 17 months as many need to invest significantly to get to the point of sale once again. In order to fund this investment, seven in 10 (70%) will be using external finance, with a third (33%) planning on taking a loan out with an alternative lender and one in five (20%) using a loan from a bank. The top three reasons for taking out
external finance include product development (48%), making new hires (44%) and investing in new technology (33%).
Not only has COVID-19 significantly impacted the day-to-day operations of their business, but now with increased market uncertainty, many business owners have been forced to reevaluate future sale plans
Toughest period SME owners across the country have faced their toughest few months since the global financial crash. Not only has COVID-19 significantly impacted the day-to-day operations of their business, but now with increased market uncertainty, many business owners have been forced to reevaluate future sale plans. Reaching a point of sale is a huge
milestone for any business owner, requiring both sheer determination and time. As such, the delay to this process is a big emotional burden, in addition to the ongoing financial and operational challenges they are already facing. Looking ahead, business owners need to
think carefully about their strategy, and, crucially, how to reach a point of sale again. This, however, is not something they need
to go at alone as there is help at hand. Whether it be to develop new products,
hire more staff, or invest in new technology, the alternative finance industry can play a big part in supporting businesses to reach their goals and navigate through this challenging environment. CCR
October 2020
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52