Gap in succession planning among UK businesses revealed

Gap in succession planning among UK businesses revealed

The Azets Barometer January 2024 survey, which gathered feedback from businesses across the UK, Ireland and the Nordics, has revealed that fewer than one in ten UK businesses have succession planning fully integrated into their strategy, despite 30% of companies demonstrating a widespread recognition of its importance.

The research also showed that more than half (58%) of businesses have considered succession in their strategic planning, with almost a third (30%) scoring 8 or above out of 10 when asked how much thought their organisation is giving to succession planning (0=no thought at all; 10 = fully integrated).

However, just 9% of businesses have succession plans fully integrated, while 6% have given it no thought at all.

Overall, UK businesses score 6.0 out of 10 for succession planning. While this outperforms the overall survey average (5.1 out of 10), it indicates a strategic gap that could impact shareholder value.

Lee Humble, UK Head of Corporate Finance at Azets, commented: “It is encouraging to see a significant number of UK companies that are considering succession planning in their strategic planning. However, the Azets Barometer highlights gap in the long-term direction of too many businesses.

Succession should be high up on the agenda of every business owner, particularly in the current economic climate. Meticulous planning that is fully embedded into your business strategy ensures future proofing and strategic continuity. It’s imperative that business owners think about their options and take control of their exit route, before it becomes forced.”

In terms of business size, the UK's approach to succession planning aligns with the overall survey trend, where larger and upper mid-sized businesses and those with higher revenues are more committed to this essential aspect in comparison with smaller companies.

Lee Humble added: “The UK mid-market is full of innovative, ambitious and entrepreneurial companies, so successful businesses can easily land on the radar of acquisitive corporates, whether they are based here in the UK, in continental Europe, or further afield, without knowing.

“Analysis by Azets of the deals we completed in 2023 shows that up to 50% of business exits stem from an unexpected approach from a buyer. Having a succession plan built into the business strategy ensures you are prepared to realise the business’ full potential and maximise shareholder value.”

You can view the key findings and explore the full survey results on the interactive dashboard at azets.co.uk/azets-barometer.

Azets ranked 5th most active financial advisor for 2023 by Experian.

Despite persistent economic challenges affecting the UK’s merger & acquisition (M&A) market, our Corporate Finance team continues to see high levels of activity. This has been reflected in the 2023 Experian M&A review, where we are delighted to have ranked 5th in the financial advisor standings.

The full report can be viewed here.

We are here to help

If you have any questions in relation to succession planning or any on the findings of the Azets Barometer, please get in touch with a member of our specialist team or your usual Azets advisor.