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Fewer than one in 10 UK businesses have succession planning fully integrated into their strategy, despite 30% of companies demonstrating a widespread recognition of its importance, according to new research from Azets.
The Azets Barometer January 2024 survey shows that more than half (58%) of businesses have considered succession in their strategic planning, with almost a third (30%) scoring eight or above out of 10 when asked how much thought their organisation gives to succession planning.
However, just 9% of businesses have succession plans fully integrated, while 6% have given it no thought at all.
Overall, UK businesses score six out of 10 for succession planning. While this outperforms the overall survey average (5.1 out of 10), Azets said it indicates a strategic gap that could impact shareholder value.
In terms of business size, the UK’s approach to succession planning aligns with the overall survey trend, where larger and upper mis-sized businesses and those with higher revenues are more committed to this essential aspect in comparison with smaller companies.
Lee Humble, UK head of Corporate Finance at Azets, said: “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.”
He 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.”
