Third of UK SME owners don't know company’s value

New research has found that one-third of UK SME business owners (33 per cent) do not know the value of their company, raising concerns that owners may be unprepared for a sale if the M&A market improves during 2024.

The study, from Marktlink, polled 1,066 business owners in the UK, Belgium, Denmark, Netherlands and the Nordics. While a third of UK owners did not know their company value, this figure was better than their counterparts in Europe, where 40 per cent of SME owners said they did not know how much their company was worth.

The figures highlight a significant degree of unpreparedness among owners, amid forecasts that the M&A market may be poised to recover during 2024 and present opportunities to owners at SME businesses.

While appetite for SME acquisitions may be set to increase, however, owners typically need to be well-informed about the value of their business in order to make the most of such opportunities, with investors placing significant emphasis on a detailed valuation.

Jonny Parkinson, managing partner at Marktlink’s Manchester office, said: “Having an accurate business valuation is key for business owners and step one if they’re considering a sale.”

“With 2024 expected to bring a much brighter outlook for M&A activity, SME leaders need to be aware of their business value to be able to take advantage of an increase in opportunities and ensure they are ‘exit ready’.”

The survey also found that 32 per cent of UK SME owners think that their business is currently undervalued, which could also harm their prospects of attracting new investors.

Parkinson continued: “This is equally important for owners who may not be considering a sale immediately. Even if a sale isn’t a consideration for the next five years or more, working with an adviser to establish a current valuation and a plan to reach a desired valuation will help to close the expectation gap and allow shareholders to maximise value when they decide to exit.”

75 per cent of UK owners said that they expect their company value to increase over the coming year, compared to a European average of 72 per cent. In order to make the most of these improving market conditions, however, it will be vital that owners are able to accurately gauge the worth of their company.


Are you prepared? The key questions for owners considering a sale

UK SME leaders are optimistic about the prospects for improved M&A in 2024

One in five UK SME owners are planning a full or partial sale over the next two years

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