UBS Investor Watch Report Reveals Entrepreneurialism Is Booming, But Millennials Are Reluctant to Jump In

NEW YORK–(BUSINESS WIRE)–Most wealthy investors believe the economic climate is ripe for owning a
business, and many (58%) would consider starting one now or in the near
future. At the same time, others see an opportunity to exit their
business and make a profit, yet 48% have no formal exit strategy in
place and it’s unclear who will step into their shoes. Seventy-seven
percent of Millennials feel that starting a business is too risky and
four-out-of-five business owners say their children would rather inherit
the money from the sale of the business than the business itself. This
is according to UBS Wealth Management USA’s latest UBS Investor Watch
report, “Who’s the boss?”, released today, which delves into investors’
sentiment on business ownership. The quarterly survey, in its 22nd
edition, polled over 2,000 affluent and high net worth investors,
including 1,085 business owners.

Prestige in being an entrepreneur

The report indicates that the era of the entrepreneur is here to stay,
with 73% of respondents agreeing that recent tax reform makes business
ownership more attractive and 72% saying they are highly optimistic
about the state of the current economy, the highest level since the
financial crisis. Almost half (49%) of wealthy investors believe that
being an entrepreneur is now one of the most prestigious career paths,
second only to being a doctor.

Many current business owners are looking to exit

The economic environment is also driving current business owners to
consider their exit. Forty-one percent of business owners expect to
leave their business in the next five years. Over half of these owners
(52%) plan to sell, not only because many are approaching retirement age
but because timing may boost their chances of securing a favorable sale
price. On the other hand, only 20% plan to leave the business to their

“Small businesses are experiencing an important shift,” said Paula
Polito, Client Strategy Officer of UBS Global Wealth Management.
“Most owners are choosing to sell instead of passing businesses to the
next generation to fill their shoes.”

Most are unprepared

Though a majority of exiting business owners are planning to sell, many
are woefully unprepared. Fifty-eight percent have never had their
business formally appraised, and 48% have no formal exit strategy in
place. This indicates a knowledge gap for the 75% of owners who believe
they can sell their business in a year or less.

“Selling a business successfully requires a great deal of planning,
which owners often underestimate,” said Stewart Kesmodel, Head of Global
Family Office, Americas for UBS Global Wealth Management. “Before
pursuing a sale, it is important for business owners to not only have a
view on the value of their business to potential buyers, but also an
understanding of how that price applies to their personal needs

Heirs are reluctant to take over the business

Among business owners who plan to sell but considered leaving the
business to family members, 89% cite a lack of interest from their
potential heirs as the main reason, while 21% felt that their family
members were not qualified to take over the business. These would-be
sellers also overwhelmingly agree that their children would rather
inherit assets from the sale of the business (82%) than the business

Business owners who do plan on passing their business on to family have
concerns about their legacy. Most (57%) are concerned about their heirs
taking the business in a different direction, and an equal number are
worried that heirs might sell the business outside the family. Their
biggest fear, however, is missing their role in the business (62%) after
spending a lifetime building a successful enterprise.

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