Business beaver (From Wiltshire Business Online)

Business beaver

2:25pm Tuesday 1st July 2008

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WITH the summer here, the promise of warmth comes in stark contrast to the gathering gloom of credit crunch and economic slowdown.

There is no doubt the business transfer marketplace has got harder over the last 12 months but the general consensus among people working in this space is that the current climate still supports the right deals being done.

The problem for many owners is they don't know where to start when it comes to selling their business.

Ipsos MORI was recently commissioned by RBS to carry out a research study in this area. The report, "Beyond Tomorrow 2008", raises some interesting points.

It indicates that nearly 60 per cent of owners are considering selling some or all of their shares within the next five years. Some 71 per cent of respondents had held their shares for more than 10 years; for these people selling is a major decision and can be a very stressful time.

The report also reveals a lack of familiarity of the options available to business owners when thinking of selling. Just over 60 per cent were aware of a potential exit by way of a management buyout but nearly half were not very familiar with exits by way of restructuring the financing of the business, management buy-ins or earn-outs.

The report also highlights interesting trends in vendors' expectations when asked what their business was worth. On average, about 30 per cent had a realistic view. Perhaps of more significance, though, it also demonstrates that the smaller the business the more optimistic the owner's view of its value; with businesses worth less than £1m being optimistically valued by 55 per cent of owners compared to 18 per cent for businesses worth in excess of £5m.

All business owners will at some stage be looking to exit and will need to understand the process and implications sooner rather than later. Business Link is holding a workshop, "What is your business worth?", on this topic on July 22. Details can be obtained by calling 0845 0707 747 or by emailing 1events@businesslinksw.co.uk.

Copies of the report, "Beyond Tomorrow 2008", can be obtained by calling 0800 0732257 or visiting rbs.co.uk/beyondtomorrow.

• With Rob Harman of Morris Owen

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