Survey: Nearly Half of Business Owners Planning an Exit in the Next 5 Years

According to a new survey by Value Builder System Analysis, entrepreneurs are eager to exit their businesses, and COVID-19 may be driving this shift. The economic impact of the pandemic has been swift and intense for entrepreneurs. As a new wave crests, businesses continue to face short- and long-term challenges, triggering uncertainty about the future and forcing them to weigh shutting down altogether or selling their company sooner than they originally planned. To weigh the effects of the pandemic on sale decisions, researchers analyzed 9,765 surveys from business owners across the globe who use The Value Builder System software. They then divided the data into two cohort groups: the pre-COVID group and the during-COVID group. They identified some key differences between the groups, including:

• The proportion of owners that expected revenue decreases after COVID increased by 350 percent.
• There was a 17 percent increase in the share of owners who hoped to sell their companies to a third party and a 42 percent decline in the share who hoped to pass their businesses to children following the beginning of the pandemic.
• There was a 20 percent decrease in the number of owners intending to remain at the helm of their business for the next decade or longer. Nearly half asserted that they plan to make an exit within 5 years.

Small business owners face incredible pressures in the wake of COVID. Many can’t imagine navigating several more years of stress and pressure, and are happy to part with their business, even for bargain basement prices, if it means a relief from the stress. This points to some significant economic effects, and suggests that the market may soon be flooded with businesses whose owners are eager to sell.