A business exit is momentous for both professional and personal reasons. Entrepreneurs let go of a start-up they’ve cradled and nurtured, often against the odds, and they unlock the value of years, even decades, of hard work.
Deciding when and how to exit is one of the most important decisions a business owner will make. That’s why when owners start thinking seriously about an exit, they tend to focus on the pros and cons of the two most familiar exit options. To put up the ‘for sale’ sign and aim for an exit via a trade sale, or pursue an IPO (initial public offering).
However, the timing and nature of an exit strategy can have impacts on individuals’ and families’ broader financial planning, and these two most traditional exit routes might not suit every entrepreneur’s long-term goals.
Fortunately, they’re not the only options when taking equity off the table.
How the exits environment has changed
Following a strong 2024, exit activity has resumed well in the first quarter of 2025.
It’s hard to beat the valuations that can be achieved by a successful public listing, but IPOs can be notoriously hit and miss. The post-pandemic surge in investment into new listings in 2021 shows what’s possible. However, our latest research into the exits space brings to light how scepticism about market sentiment and investor confidence has led to a significant slowdown in new listings since then.
Acquisitions, by comparison, remain the dominant form of exit. 2024 marked the second-highest year for UK acquisitions in a decade. Highly strategic acquirers can offer entrepreneurs the peace of mind that their company will be looked after, but any sale usually involves a complete handover of control, which makes some owners unsure.
Read more: Which type of exit strategy suits your business needs?
An interesting feature of the exits landscape over recent years has been the rise in secondary transactions, from 650 to a peak of 1,799 in 2022.
What is a secondary transaction?
Over 1,700 business owners make secondary share sales each year. A secondary transaction may sound complicated, but the concept is quite straightforward.
In one of these deals, an existing shareholder (such as a business owner) agrees to sell some of their existing shares in the business to another investor. No new shares are issued and controlling ownership of the company doesn’t always change – this depends on the size of the transaction.
The buyer and seller agree on a valuation in private, potentially based on the outlook for the company or what’s implied by an earlier funding round.
Why business owners choose secondary transactions
The decision to unlock value in an exit need not be all or nothing – business owners need flexibility to meet the long-term goals of themselves, their families, and businesses.
With a secondary transaction, business owners are able to reward themselves with a partial value unlock while retaining ownership of their business at the same time – flexibility that’s logical for those with companies still in high growth.
Business owners might also have immediate financial needs or wish to take advantage of other opportunities. A secondary share sale can help raise these funds without forcing a full exit or an unwanted, dilutive issuance of new shares.
It might also make sense for owners to sell down some of their stake if their entire net worth is tied up in the business. This can help to diversify and reduce risk.
Secondary transactions can bridge the gap to a full exit
In our latest research, we’ve seen secondary deals almost triple over the last decade. This trend can be explained by both an increase in equity-backed businesses across the board and a preference to stay private for longer.
A secondary transaction doesn’t rule out an IPO or an acquisition further down the line. An entrepreneur might intend to continue running and growing their business, which can lead to future exit opportunities at stronger valuations. Over the past ten years, the majority (51.6%) of full exits have come at the ‘established’ phase of a company’s evolution. But given this can take years to reach, secondary deals potentially offer useful, interim liquidity.
Download our latest report on Exits in the UK
As part of the Fortune Favours series, our latest report features statistical analysis and case studies, exploring the trends and talking points for business owners nearing an exit.
We have analysed over a decade of exit activity to pull insights on acquisitions, IPOs, and secondary transactions, so if you’re monitoring the market as a business owner, an investor, or simply as an onlooker, we hope you find this report useful.
Working with Charles Stanley
Exiting a business in today’s dynamic market is more than just a milestone – a strategic process that requires foresight, planning, and expert guidance. Whether you’re just starting out, scaling up, or actively preparing for an exit, engaging with a trusted adviser like Charles Stanley at any stage of your journey can make a meaningful difference. Early conversations can help you structure your exit in a tax-efficient way and preserve the value of what you’ve built. Ongoing support brings clarity, confidence, and control to every decision, empowering you to move forward with confidence.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
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