Kapital Minds study: Two out of three entrepreneurs in our country consider selling the business as the main option for exit

Two out of three entrepreneurs believe that selling their business entirely is their main exit option, followed by partial sale to a private investor (42%), transition to family or management (33%) and listing on the stock exchange (12%), according to to a study carried out by the entrepreneurial consulting company Kapital Minds, presented yesterday during a press conference.

The relatively high preference for a partial exit and the reluctance to liquidate the business may indicate a still high level of attachment of Romanian entrepreneurs to their own business, mention the authors of the study, which was carried out in August, on a sample of 400 companies from the country ours, with a turnover of at least 500,000 euros.

Laurentiu Stan, the company's founder and director, said: "Entrepreneurs are very reluctant when talking about the value of their business. For an entrepreneur, his business has an extremely high sentimental value. Many trades don't go through because of different price expectations. But I think even more are not done because the owner gets scared, doesn't know what comes next. He is not willing to give up, because he is not ready to take this step. Even if they are offered a fairly substantial amount of money, at first the owners are excited, but later they think twice and often give up."

• Turnover and profit - the factors that entrepreneurs consider most important for increasing the value of a business, according to research

According to the Kapital Minds study, turnover (35% of respondents) and profit (24%) are the first factors that entrepreneurs consider important for increasing the value of a business, followed by customer relations (18%), human capital ( 12%) and intellectual property (7%).

"We forget that these amounts in a company's accounting are generated by the strength of human capital, the stability of customer relations, the brand and the other intangible assets that are not visible in the accounting but sometimes represent over 80% of the business value. The main goal of Kapital Minds is to increase the value of the company by addressing each factor that adds value", says Laurentiu Stan.

To the question "How important do you consider planning an eventual exit in order to be successful?", although 82% of respondents said they were not familiar with this type of service, 75% believe that planning an eventual exit in time is exit is important and even very important to be successful.

• Maximizing business value - the main benefit of a well-structured exit plan, according to Kapital Minds study

According to the study, the main benefits that entrepreneurs see in a well-structured business exit plan are maximizing the value of the business upon sale (46%), protecting the interests of employees and customers (45%) and ensuring a smooth transition for the successor / buyer ( 27%).

Two-thirds of respondents believe that the sale of the business should be planned at least six months in advance. It is also very interesting that 5% of the respondents believe that the planning of a possible sale should start from the establishment of the business, which already shows a change of mentality, even if at an early level, among entrepreneurs in our country.

In general, the exit planning process can take between one and two years, sometimes even three, depending on the size and complexity of the business, according to the study.

To the question "What do you think would be the biggest challenge in planning an exit for your business?", 42% of respondents pointedly mentioned Setting the right price, 26% said Finding a suitable buyer and 15% Ensuring business continuity.

"Many potential transactions fail because the seller and buyer have vastly different expectations of price. Entrepreneurs tend to be far too optimistic in valuing their own business, which often has an important sentimental value. On the other hand, investors expect to pay a lower price to compensate for the risk they take when investing in a business. That's why an independent, objective assessment anchored in the reality of the specific market is always the first step in an M&A process", say the authors of the study.

Laurentiu Stan, the founder of Kapital Minds, is an expert with over 20 years of experience in financial evaluation and consulting.

"I want to turn consulting for increasing business value and exit planning into a profession in our country, as it has become for many years in the United States of America. The fact that I am the first Romanian member of the Exit Planning Institute (USA) represents an opportunity to implement in our country the methodology for accelerating the value of companies. I want entrepreneurs to know all the possible tools for increasing the value of their business. We are thus building a community of business people who support each other and share knowledge", said Laurentiu Stan.