Almost three-quarters of UK entrepreneurs are putting the long-term success of their business at risk by failing to give adequate thought to how they will eventually leave it.
More than seven out of 10 business founders were still involved in the day-to-day running of the business, yet nearly four out of 10 had no exit plan in place, according to the research by consultancy Deloitte.
More than a third were passively waiting for an opportunistic approach from a third party rather than actively planning their exit from the business, it added.
Yet, argued Tony Cohen, head of entrepreneurial business at Deloitte, having a clear exit strategy in place from the outset was in fact essential for the long-term health of any business enterprise.
"An entrepreneur's first objective, understandably, tends to be to create a business upon which to build value," he pointed out.
"They will often only consider selling that business when first approached by a potential buyer. This can leave them unprepared and at a disadvantage. Having a clear exit strategy in place from the outset may sound counter-intuitive but is, in fact, essential," he added.
"With entrepreneurial businesses, it is vital to plan for the future, growing the value and attractiveness of the business by implementing a clear development strategy from the beginning, including putting in place a strong management team to lead the business following the eventual departure of the entrepreneur," he continued.
Cohen pointed to the fact that private equity houses were often keen investors in family businesses, eventually buying more than six out of 10 family businesses.
"Unfortunately the lack of planning results in difficulties agreeing a price, with owners reluctant to give potential investors access to vital financial information," he warned.
"On the positive side, good succession planning through a management buy-out can ensure the family firm maintains independent ownership and stewardship, albeit in a metamorphosed business structure," Cohen added.
"An exit is not something which can happen easily overnight and time spent planning for the inevitable and structuring the business correctly is seldom wasted," he concluded.
