Retiring owners driving demand for business acquisition funding

A growing wave of retiring business owners is fuelling demand for business acquisition funding, according to the latest commercial broker survey from SME funding provider Asset Advantage.

Nearly seven in ten commercial finance brokers (69%) said that plans to retire or step back are the main reasons business owners are looking to sell, highlighting a surge in ownership transitions across the UK’s SME landscape.

The survey also found that 46% of brokers cited owners’ desire to cash out and realise the value they’ve built as a leading motivation for selling. A further one in five (20%) said business owners are being pushed to exit by rising costs, such as higher employer National Insurance contributions, wage increases and other overheads.

Only 9% of brokers pointed to concerns over employment law or regulatory changes as a major influence on exit decisions.

The findings come from Asset Advantage’s latest Commercial Broker Survey, which explores current funding needs, funder appetite and trends in business acquisition activity to gauge the evolving commercial finance market.

Gary Thompson, Sales Director at Asset Advantage, said the data underscores a generational shift in business ownership:

“While it may be easy to draw conclusions from the current economic or political climate, our data suggests that retirement still remains the primary motive for business owners to sell,” Thompson said. “As these experienced owners look to depart and hand over the baton, it will reshape the ownership landscape within UK SMEs and drive demand for both specialist advice and flexible funding.”

He added that funders must stay active and adaptable to support these transitions:

“To facilitate these deals, funders have to be present and proactive, with an appetite for growth and expansion-based lending and, importantly, an open-minded approach.”

Thompson noted that while higher costs may be accelerating exit decisions for some older owners, others are simply choosing the right time to realise value.

“Whether it’s driven by business owners or by their existing management teams, our data tells us that there is real demand for business acquisition funding, which is likely to be a consistent theme over the coming years,” he said.