The number of entrepreneurs in the United Kingdom opting to sell their businesses rather than expanding them has reached an eight-year high, according to recent analysis. Research based on Companies House data by wealth management firm Rathbones shows that 5,774 businesses changed hands last year, up from 5,684 in 2024 and representing a 70 percent increase compared to 2018.

Experts attribute this trend to the challenges faced by business owners seeking to scale up, including burdensome regulation and taxation. Richard Greenhalgh, head of Rathbones’ Manchester office, said that while the UK does not struggle with startups, it has a significant problem with scaling businesses. He noted that entrepreneurs are often reluctant to pursue the next stage of growth due to the efforts and sacrifices required, compounded by issues such as changes to national insurance and business property relief.

This data emerges just days ahead of Chancellor John Healey’s first Budget announcement on October 28, which is anticipated to include measures aimed at easing regulatory pressures on small business owners. The government recently declared plans to reduce the administrative burden on firms, promising “more breathing space” to support business growth. Healey acknowledged in a recent interview that entrepreneurs have faced “bloody-minded” pressure due to increased taxes and shifts in employment law in recent years.

Michelle Ovens, chief executive of Small Business Britain, welcomed the Chancellor’s commitments but noted that government engagement often focuses on larger businesses, while smaller “bloody-minded” entrepreneurs remain underserved. Greenhalgh emphasized that greater confidence among business owners to invest and expand could have widespread benefits for the economy.

While the number of new businesses launched annually has risen by around 100,000 over the past two years and failures have declined, most firms are sold before reaching significant scale. Rathbones’ data indicates the median turnover at exit was £15.9 million, suggesting that many sales occur before firms mature into substantial enterprises.

Government figures show the UK performs well in attracting global venture capital investment at the startup stage, matching the Bay Area in California. However, the UK’s share of investment drops considerably at breakout and late-growth stages—holding just 6 percent and 5 percent of global investment, compared with 16 percent and 48 percent for the Bay Area.

Trade sales continue to be the predominant exit route, accounting for 3,749 business sales last year. However, the number of UK firms sold to private equity more than doubled since 2018, while management buyouts increased by 22 percent in 2025 compared to the previous year.

Dominic Hughes, senior investment director at Rathbones, observed that growing a business requires persistent effort and multiple funding rounds, and when these conditions worsen, entrepreneurs understandably choose to sell earlier. He warned that this trend risks depriving the UK economy of future major employers and exporters, as promising firms are sold before reaching their full potential.