Key Findings:
- 73% of wealthy investors find business
ownership enticing given recent regulatory and tax reform
- 58% of wealthy investors are
considering starting a business now or in the near future
- 77% of Millennials are reluctant to
jump in saying that it’s too risky, and four-in-five current owners
say children would rather inherit money than the business
itself
- 52% of business owners who plan to exit
in the next five years will sell, although they have neglected the
preparation required to sell at a profit: 58% have never had their
business formally appraised, and 48% have no formal exit strategy
in place
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 family.
“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 post-transaction.”
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 itself.
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.
Millennials see the appeal, but remain wary
Among those considering starting their own business, Millennials
lead the pack, with 72% responding positively. However, there is a
marked hesitation to make their dreams a reality and lay the
necessary groundwork. In fact, 77% of Millennials think becoming a
business owner is too risky, compared to 55% of Gen Xers and 43% of
Boomers. Millennials also feel that the stress level of owning a
business is too high (83%), while only 64% of Gen Xers and Boomers
agree.
“Many Millennials joined the workforce in a tough job market,
whether it was during the dot.com bubble burst of 2000 or the Great
Recession of 2008,” stated Sameer Aurora, Head of Client Strategy
for UBS Global Wealth Management. “These factors likely contribute
to a more conservative outlook when it comes to business risk and
can prompt many Millennials to seek job security in larger
corporations as opposed to start-ups.”
###
About UBS Investor Watch
UBS Wealth Management Americas surveys U.S. investors on a
quarterly basis to keep a pulse on their needs, goals and concerns.
After identifying several emerging trends in the survey data, UBS
decided in 2012 to create the UBS Investor Watch to track, analyze
and report the sentiment of affluent and high net worth investors.
For more information on UBS Investor Watch, visit
ubs.com/investorwatch.
Methodology
For this twenty-second edition of UBS Investor Watch, we
surveyed 2,245 high net worth investors (with at least $1 million
in investable assets) from December 13 - January 2, 2018, including
264 with at least $5 million. 1,085 survey respondents are business
owners (770 current/315 former) with at least one employee and
$250k in annual revenue. With 90 survey respondents, we conducted
qualitative follow-up interviews.
Notes to Editors:
About Global Wealth Management
Global Wealth Management provides comprehensive advice,
solutions and services to wealthy families and individuals around
the world. Clients who work with UBS benefit from a fully
integrated set of wealth management capabilities and expertise,
including wealth planning, investment management, capital markets,
banking, lending and institutional and corporate financial advice.
As the world’s largest wealth manager, UBS provides clients with
access to a wide range of products and solutions from leading
third-party institutions that complement its own offering.
About UBS
UBS provides financial advice and solutions to wealthy,
institutional and corporate clients worldwide, as well as private
clients in Switzerland. The operational structure of the Group is
comprised of our Corporate Center and four business divisions:
Global Wealth Management, Personal & Corporate Banking, Asset
Management and the Investment Bank. UBS’s strategy builds on the
strengths of all of its businesses and focuses its efforts on areas
in which it excels, while seeking to capitalize on the compelling
growth prospects in the businesses and regions in which it
operates, in order to generate attractive and sustainable returns
for its shareholders. All of its businesses are capital-efficient
and benefit from a strong competitive position in their targeted
markets.
UBS is present in all major financial centers worldwide. It has
offices in 54 countries, with about 34% of its employees working in
the Americas, 35% in Switzerland, 18% in the rest of Europe, the
Middle East and Africa and 13% in Asia Pacific. UBS Group AG
employs approximately 60,000 people around the world. Its shares
are listed on the SIX Swiss Exchange and the New York Stock
Exchange (NYSE).
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version on businesswire.com: http://www.businesswire.com/news/home/20180213006035/en/
For UBS Global Wealth Management:Maya Dillon,
212-713-3130Mobile: 917-615-7094Maya.dillon@ubs.com
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