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Larry the cat outside 10 Downing Street | AccountingWEB | Will this election be one change too far for some business owners?
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Will this election be one change too far for some business owners?

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Election uncertainty may push older business owners to retire, prompting a surge in exit planning and business sales, writes Kirsty McGregor.

23rd May 2024
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Apparently Pericles, the Greek politician from 5th century BC, said “Just because you do not take an interest in politics, doesn't mean politics won't take an interest in you!”

And so we start six weeks of campaigning and I expect at time, weariness about it all! 

Do you find that some of your clients are delighted that the prime minister has called the general election but some have just had enough of all the uncertainty and wonder what will happen next to challenge them when trying to run their companies?

I wonder if some business owners, especially older ones, may decide that this the tipping point for them. After navigating the fallout of a pandemic, global supply chain issues and various political upheavals, will this be the point they think that it’s finally time to retire?

I say ‘finally’ because I’ve recently been supplied with some research which I’ve been trying to obtain for the past seven years. 

I always used to track the average ages of directors for companies in the UK and ROI (as an approximation for the age of business owners, certainly OMBs).

However, in 2017 a change at Companies House meant that the day of birth was no longer visible for new appointments, only the month and year. This meant that my traditional research sources decided that they couldn’t report on directors’ ages any longer (why they couldn’t just pick any day in the month, I don’t know!).

So I’ve been using the last data I acquired, which was in 2015 and been in the dark about what’s happened since.

Thankfully, technology and data providers have also moved on in that time and my new provider, MarktoMarket have written some code to provide me with the answer – and I was quite shocked!

In 2015, there were just over 750k companies where the average age was over 56.  Roll forward to 2024 and there are now in excess of 1.5m. Plus more than 460k of those are aged over 66. 

Active companies UK & ROI
Experian Market IQ

Given that most businesses are started by people in their 20s to early 50s, these are unlikely to be newly incorporated businesses. So it’s reasonable to assume that almost half of those companies whose directors were aged over 66 nine years ago, are still trading today. 

We know business owners don’t follow the usual retirement rules, but that statistic still surprised me.

Those who are still trading have shown they have already managed to keep afloat despite the problems of the past five years. But could the impact of an election, possibly a new government, be the final straw? Or, depending on their political preferences and the outcome of the election, they may be so excited about the future, that they want to carry on even longer!

Sadly, as energetic and optimistic as many business owners are, I think the reality of managing older age and health will catch up with many and they will be considering their exit and hopefully turning to their accountants for help.

The unintended consequence of the prime minister’s announcement could mean that the next few months bring a resultant boom in exit planning assignments and disposals. 

Corporate financiers and those accountants advising owner-managed businesses may find themselves having a very busy second half to the year.

Replies (5)

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By Paul Crowley
23rd May 2024 17:45

Not sure I am with you old chap (Goodness gracious me)
This really seems to suggest that a change of colour of the Government will drive out the old fogies.
Those trading will continue to trade, until they choose not to. It will have nothing to do with the government unless they take a very radical approach.

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Replying to Paul Crowley:
Kirsty image
By Kirsty McGregor
24th May 2024 07:35

I think I said it was more the additional uncertainty of ‘what next’, not necessarily due to their political views. We may even end up with a hung parliament this time - and who knows what the policies will look like then?

So you don’t think your older business owner clients are getting tired? There will be a catalyst for many to exit & probably in large numbers - what do you think that will be?

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Replying to kirstymcgregor:
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By Paul Crowley
24th May 2024 13:52

Based purely on Aweb members comments, quite a few planned their retirement to avoid MTD ITSA.
I would say that events that are trade specific might be a reason to exit a business, we went through uncertainties of Brexit and Covid. A new government is small fry in comparison.

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Replying to kirstymcgregor:
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By FactChecker
24th May 2024 15:12

"So you don’t think your older business owner clients are getting tired? There will be a catalyst for many to exit & probably in large numbers - what do you think that will be?"

Of course they're getting tired (younger ones are too, but with older ones then the diminished reserves of energy brought on by age are an added contributory factor).
But of all the factors out there, 'political uncertainty' is almost wholly irrelevant to all bar a few businesses in specific sectors.

You can't seriously want a full list of all those other factors - which include lack of skilled resources to hire, rising costs of employment (not just wages), rising costs of finance, increased competition from AI/non-human resources, a generational change of priorities regarding work/life balance, and on and on.
Whether or not politicians can affect any of those aspects is debatable, but there's certainly little sign of it or more importantly that any particular party has a larger track-record in achieving such core changes.

Hence, GE huh ... who cares in the context of 'to retire or not, that is the question'?

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By mumpin
25th May 2024 11:58

Outwith the Public Sector, not many employee's retire on reaching State Pension age these days.
So all your stats are doing is looking at the self-employed proportion of the population, so I wouldn't expect it to be radically different.
I think if Sir Keir cuts the lifetime pension allowance to £1m as he has promised then that might have a big impact on those calling it a day. At present, plenty of us old duffers are whacking £60k pa into their Sipp rather than taking divs.
Interesting observations though. Thanks.

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