Succession planning is becoming an increasingly urgent priority for Scotland’s owner-managed businesses, with 46% of owners expecting to exit within five years. Yet almost half have no succession or exit plan in place. Craig Blyth, Corporate Finance Senior Manager at Armstrong Watson, explores how changing tax rules, evolving ownership options and retirement plans are shaping decisions, and why early preparation matters.
For many business owners, succession planning can be difficult to prioritise amid the day-to-day demands of running a business. However, the latest findings from Armstrong Watson’s Family, Privately Owned and Owner-Managed Business Survey suggest that succession and exit planning is becoming a more immediate priority for Scotland's owner-managed businesses.
The findings indicate that a growing number of owners are beginning to consider how and when they will eventually transition ownership, while others are reviewing whether existing plans remain appropriate in a changing tax environment.
A growing need to plan ahead
The most striking finding is the growing proximity of business exits. Nearly half of Scottish respondents (46%) expect to leave their business within the next five years, while only 27% anticipate remaining for more than a decade. This is down from 34% in 2025, indicating that many owners are beginning to think more seriously about succession and value realisation.
This shift is hardly surprising. The age profile of respondents shows that more than half are aged 55 or over, meaning retirement, succession and estate planning are becoming immediate issues rather than distant considerations.
However, a significant planning gap remains. Almost half of respondents (49%) admitted they have not incorporated exit or succession planning into their business plan. For many business owners, years of focusing on customers, staff and day-to-day operations have left little time to address what happens next. Yet the reality is that succession planning often takes years, not months, to implement effectively.
Exploring a wider range of succession options
Perhaps more revealing is the changing picture around how owners intend to leave their business. While traditional family succession appears to be less common in Scotland (16% plan to pass or sell the business to their children compared with 27% nationally), those considering a management or employee buyout has risen from 6% to 14%. Interest in Employee Ownership Trusts has also increased, rising from 3% to 6%.
These figures suggest owners are exploring a broader range of succession routes than in previous years. In part, this reflects changing family dynamics. Not every next generation wishes to take over the business. At the same time, management buyouts and employee ownership models are becoming better understood and can provide attractive alternatives that preserve the business legacy.
Tax changes and decision-making
Tax policy is clearly influencing decision-making. Following changes to Business Property Relief (BPR) and Agricultural Property Relief (APR), almost one in three respondents have already reviewed their succession plans, with 22% having taken action and a further 9% having reviewed without yet acting. In addition, 35% say the changes have influenced their future decision-making either significantly or to some extent.
Looking ahead, the Budget on October 28,will be watched closely by business owners. While predicting future policy is impossible, many entrepreneurs remain concerned about the direction of travel on business taxation and need clarity. Our survey found that 84% of business owners in Scotland viewed increases in taxation as the greatest economic concern facing businesses over the next 12 months.
Business Asset Disposal Relief (BADR) will remain firmly on the radar. Any future restriction to reliefs available on a business sale could materially affect the after-tax proceeds that owners receive when they exit. For entrepreneurs considering exit, understanding the potential tax implications before any changes occur will be increasingly important.
Explore options early
It is clear that succession planning is no longer a discussion for "someday". Whether the objective is passing the business to family, rewarding a loyal management team, pursuing employee ownership or securing a third-party sale, the businesses that begin preparing early will ultimately have the greatest range of options.
If you would like further advice and support in this area, please get in touch. Call 0808 144 5575 or email help@armstrongwatson.co.uk.