Two thirds of entrepreneurs considering an exit feel pushed to sell up sooner than planned because of tax rises. If we want to keep wealth creators on British soil, we need to not only support, but celebrate them, says Kevin Barrett
Entrepreneurs are on the move and if the UK wants to keep them, it needs to act fast. 2024 alone saw the departure of 11,000 millionaires from British soil; that’s no small number. In recent months we’ve seen gloomy commentary and early data suggesting that swathes of business owners will be compelled to sell off their assets to mitigate new tax liabilities. We commissioned exclusive research which surveyed 100 entrepreneurs in the run-up to the autumn Budget to understand their priorities in the context of the current fiscal climate.
Chiming with much of the post-Budget commentary, we found that over two thirds of entrepreneurs considering an exit felt pushed to sell sooner than planned due to concerns about tax rises. This points to the broader challenges the UK faces in maintaining its reputation as a leading destination to launch and scale a business. But a deeper look at the data reveals a more complex picture.
Our research reveals that the reality of what motivates entrepreneurs to exit is far more complex and emotion-led, going beyond purely transactional considerations. While statistics on wealth creators leaving the UK suggest that tax considerations are driving the timing of exits, this overlooks the deeper personal and emotional factors at play.
It’s never just business
For many entrepreneurs, selling their business feels like selling a child. It’s something they’ve invested years of time, energy, and passion into – something that’s become deeply personal. Over two-thirds of the entrepreneurs we spoke to started their business as a passion project or to realise a particular ambition. Added to that, a lot of time and effort goes into establishing an enterprise and even more to making it succeed. When you’ve dedicated so much of yourself to a venture, the decision to sell is never just financial – it’s profoundly emotional. Therefore, there are some founders who don’t see themselves exiting their business in the future. Over half of the entrepreneurs we spoke to who didn’t see an exit, said that they wanted to maintain their legacies, be it for their families and future generations, or wanted to preserve their financial autonomy and independence in a world of ever-rising costs.
Although running a business is rewarding, being an entrepreneur is hard. It requires long hours, personal sacrifice and moments of financial uncertainty. Such factors are frequently cited when founders choose to exit their business, though generally multiple considerations feed into an entrepreneur’s decision to sell, both emotional and financial.
Although running a business is rewarding, being an entrepreneur is hard. It requires long hours, personal sacrifice and moments of financial uncertainty
The emotional aspects of selling a business begin even before the sale process, which is itself challenging, commences. Many entrepreneurs who are yet to sell their business admitted that even the thought of exit causes them anxiety. The transition away from the business, the due diligence, paperwork and the future of client and community relationships as well as that of employees, are all factors that entrepreneurs must consider at this life-altering moment. It is daunting, stressful and sometimes lonely.
Support and celebrate wealth creators
Our research confirms what our experience also tells us – letting go of something that encapsulates your life’s work is an incredibly personal process. As one entrepreneur we spoke to said: “selling a business is highly emotional – far more than it is financial… you’ve given everything to it, lived and breathed it, and now you’re handing it over to someone else.” Without the guiding force of their company, entrepreneurs often grapple with a profound sense of disorientation. The silence after selling a business can be deafening, leaving entrepreneurs feeling lost and directionless. We must recognise and address these emotional challenges. Creating the optimal environment for enabling entrepreneurs to prosper requires an appreciation of this very common perspective and how it informs decisions at the critical moments in a founder-led business’s lifecycle.
Entrepreneurs need advisers who can guide them through not just the financial considerations of an exit but also the deeply personal challenges, from preserving their legacy to navigating the next chapter of their lives. This necessitates an understanding of the whole picture, from the commercial aspects through to the emotional ones.
The advisory community’s ability to meet the needs of entrepreneurs as they launch, scale and eventually exit their business is an important component of what will make the UK a magnet for those ambitious to start a business. And this matters – entrepreneur-led businesses are fundamental to our economy’s growth ambitions; they create jobs, support communities and are often at the vanguard of innovation. It’s our collective responsibility to support these wealth-creating trailblazers.
Entrepreneurs have the capacity to create pockets of prosperity, especially important at a time when growth is stalling. As we face economic challenges, it’s more important than ever to foster an environment where entrepreneurs are not only supported but celebrated for their ability to drive innovation and growth. When entrepreneurs thrive, we all benefit.
Kevin Barrett is managing director,private and commercial banking at Arbuthnot Latham