The research also found that of businesses expecting to change hands, 38% expected to do so within two years. It said 51% expected to change hands in three to five years, and the remaining 11% within 10 years.

The research was carried out among the owners of 7200 medium to large privately held businesses in 32 countries, including 200 in SA, in November and December .

The last time that a study in change in ownership was carried out by Grant Thornton was in 2005. The expected pace of change for the owners of medium to large privately held businesses has increased since then. In 2005, 47% of businesses in SA expected a change in ownership within 10 years. Of those, 77% anticipated the change would take place within the next five years (12 percentage points below the present results).

Leonard Brehm, national chairman of Grant Thornton SA, said: “The expected churn reported by South African businesses relates directly to black economic empowerment (BEE). With the BEE codes of good practice now gazetted and business ownership providing some of the highest points on the scorecard, a change in business ownership makes sense for many people looking to ensure their businesses’ sustainability.”

When asked how business owners expected the change in ownership to take place, 45% of South African entities said sale to employees followed by management buy-out or buy-in at 35%.

These findings further support Brehm’s opinion regarding ownership churn in SA because globally, a trade sale (25%) is the most likely future of a privately held business, followed by private equity (20%), and management buy-out or buy-in, or mergers (both at 16%).

Sale or transfer to a family member is the expected outcome for 15% of businesses, and the least likely manner in which to change ownership is through sale to employees (10%).

Brehm said: “This means that SA currently offers the greatest opportunity for a new generation of business leaders.”

Globally, 28% of privately held businesses are expected to change hands within the next 10 years. Of those entities, 25% will do so within the next two years. Following SA, New Zealand (51%), Canada and the Philippines (48%) are the most likely to witness changes in company ownership over the next 10 years.

According to research carried out by the firm earlier this year, most privately held businesses had placed BEE firmly on their agenda. But the report recorded that only 38% of businesses reported that ownership was of great importance. This response places ownership fifth out of the seven elements of the codes of good practice, behind skills development (67%) and employment equity (59%).