Examination of the key factors driving business exit options in Australian Small and Medium Enterprises

Craig West

Research output: ThesisDoctoral Thesis

337 Downloads (Pure)


The current study investigates the issue of business exits in Australia. This study aimed to determine which exit options are available to Australian business owners and to examine why owners choose to implement a particular exit strategy. Understanding the critical decision factors around individual exit options will help establish important business outcomes for use in practice.

The goal of this study was to determine which options provide the best outcomes for a successful exit under varying circumstances. In particular, this study considers the potential use of employee share ownership plans (ESOPs) as a viable business succession and exit planning tool to better prepare a business for sale. This can be done by reducing key person risk and facilitating a potential sale of the entire business to its employees via the ESOP vehicle. In addition, the ESOP exit option is one of the only exit options which can provide key outcomes relating to financial harvest for the owners and an ongoing legacy or stewardship outcome.

Therefore, this study first sought to understand decision factors leading to a particular exit choice and also sought to identify and examine the effect of any potential barriers which may exist to restrict or prohibit the use of ESOPs. Accordingly, the study addressed the following general research questions:
1. What succession methods are currently being employed in Australian businesses?
2. Which exit options are preferred, and what motivating factors are driving this choice?
3. What is preventing the uptake of ESOPs as an exit option for small and medium-sized enterprise (SME) business owners in Australia?
A mixed-methods approach combined qualitative case study interviews to better inform the key themes and focus areas for a quantitative business owners survey.

The research provided significant results in terms of key drivers of exit choice and several critical items for practice to improve the outcomes of business owners approaching exit. Overall, five of the six hypotheses were supported by the research findings. Detailed analysis to account for possible variation of test results across individual exit options also provide evidence supporting the proposed hypotheses.

The key findings highlight the influence of awareness, time and financial reward, and both family and adviser involvement on exit choice and provide guidance for improved practice in business succession and exit planning. The critical theme of balance between financial harvest and legacy stewardship exit options emphasises combination exit strategies, particularly ESOP, due to the changing financial position of many baby boomer business owners.

The study highlighted adviser and owner education on exit options, the influence of both advisers and family members on exit choice and the changing focus away from financial reward and towards legacy stewardship outcomes as a key focus for improvements to practice in the area of Business Succession and Exit planning.

Opportunities for improvement in delivery of advice and solutions for exiting business owners were also identified in the study and may be utilised by accountants, financial advisers and specialist mergers and acquisition or succession planning advisers. Government agencies may also like to review support offered to business owners.

This study is significant given that the financial value of business assets and the wealth associated with those assets held by ageing baby boomers is estimated to be approximately ten trillion dollars (Jackim & Christman, 2006), for comparison the total market capitalization of the Australian Securities Exchange is 1.72 trillion dollars.
Original languageEnglish
QualificationDoctor of Business Administration
Awarding Institution
  • Charles Sturt University
  • Wong, Alfred, Principal Supervisor
  • Neher, Alain, Co-Supervisor
  • Hicks, John, Co-Supervisor
Place of PublicationAustralia
Publication statusPublished - 2022


Dive into the research topics of 'Examination of the key factors driving business exit options in Australian Small and Medium Enterprises'. Together they form a unique fingerprint.

Cite this