The latest Azets Barometer survey – which measures the opinions of business leaders across the UK, Ireland and Nordics – reveals that less than 1 in 10 businesses have created and integrated succession plans into their businesses. The barometer has revealed a wide gap between recognition of the importance of succession planning with very low rates of structured planning and implementation.

The ‘Succession Gap’ is a real strategic problem that will impact shareholder value and the long-term future of many owner managed businesses, according to Graham Cunning, head of corporate finance with Azets in Scotland.

He noted: “It is encouraging that the majority of business owners are now considering succession in their strategic planning, which compares favourably with very low levels of awareness just twenty years ago. However, it is important that business owners take the next steps to invest in a full succession plan and ensure that succession is actually happening in terms of business leadership.

“Embedding succession planning into the way a business is run will help ensure the longevity of the business and provide owners with the comfort that their hard work will result in a business legacy after their own exit. Failing to have any form of succession planning at all is a major strategic risk that too often can result in significant loss of value or worse.”

Research into deals completed by Azets in 2023 showed that up to 50% of business exits stem from an unexpected approach from a buyer, often at a time least expected by a business owner.

“Buyers and funders see much less risk when a succession plan is in place and value the fact that management succession is already underway, particularly when a business has not been put up for sale”, added Mr Cunning.

The Azets Barometer provides insight into the current and future business climate through the perspective of ambitious mid-market, owner-managed, and family-owned businesses in the UK, Ireland, Norway, Finland, Sweden, and Denmark. The January 2023 survey is the first in a new triannual series to identify trends relating to economic outlook, financial performance, and emerging threats and opportunities.

The research also revealed levels of optimism among businesses, with scores averaging 5.6 out of 10. The UK’s economic outlook for the next 12 months scored of 5.1 out of 10, hinting at a cautious, wait-and-see approach towards prospects. Of the 323 UK respondents, 41% expressed moderate optimism with scores of 6 or above, contrasted with 35% who were more pessimistic, scoring 4 or lower. UK businesses were the least optimistic in the survey.