The Founder Can Leave. The Business Should Be Able to Grow.

The Financial Times article “Number of UK founders choosing to sell not scale hits eight-year high”, published on 22 October 2026, raises a more useful economic question: why does continuing to grow become less attractive than selling?

Original article:

https://www.ft.com/content/52b728a2-3075-4310-bffb-4f17b587724d

The report cites 5,774 business sales in 2025, against 5,684 in 2024, and a roughly 70% increase from 2018. The latest annual increase is therefore about 1.6%. A long-term rise deserves investigation; it cannot, by itself, demonstrate a sudden change in entrepreneurial temperament.

The article also reports median turnover at exit of £15.9 million. Turnover is revenue, not the price received by the seller.

My interpretation is that the central question concerns the transfer of responsibility. Who can finance the next stage? Who can operate it? How much risk can the current owner reasonably bear? Where will the resulting economic activity take place?

A transaction changes the ownership of a business. Its effects on growth must be established separately. The buyer may introduce better management, capital and distribution. It may also overpay, overload the company with debt or reduce competition. Counting deals cannot distinguish those outcomes.

The US comparison is useful when it moves beyond stories about national confidence.

The UK government’s 2026 venture-capital evidence pack puts Britain’s 2025 share of global late-stage investment at 5%, compared with 48% for California’s Bay Area. Its late-stage category covers funding rounds above $100 million. The Bay Area is one highly concentrated ecosystem; it should not stand in for every American company.

A separate ECB analysis estimates aggregate venture-fund size at around €930 billion in the United States and €150 billion in the EU. It identifies particular weaknesses in European later-stage financing and notes the stronger participation of US pension funds and foundations. These figures describe capital stocks and market structure, rather than annual funding flows or the entire economy.

That evidence gives substance to the proposition that financing helps explain differences in scale. It does not establish that American founders possess a superior appetite for risk.

Consider the distribution of that risk.

A founder can have nearly all their financial wealth, salary and professional reputation tied to one company. A venture fund can own a portfolio. Its underlying institutional investors can diversify across funds and asset classes.

The founder and the investor can examine the same expansion plan and reasonably reach different conclusions. Their exposure differs, their liquidity differs and their responsibilities differ.

External equity can move part of the risk to investors better able to bear it. Professional management can move operating responsibilities to people equipped for a larger organisation. Together, those changes can make a growth strategy feasible that the founder could not comfortably pursue alone.

This is the mechanism I would investigate before attributing different company sizes to different national personalities.

There is also evidence that the scale gap is real. An ECB exercise suggests that roughly one third of the aggregate EU-US productivity gap is associated with differences in the distribution of employment across firm sizes. It is a counterfactual accounting exercise, not proof that making every small company larger would produce the same gain. The ECB also identifies cross-border legal fragmentation as an obstacle to expansion.

The practical implication is that a founder’s ambition interacts with an institutional environment. Financing, recruitment, contracts, management and access to customers determine which ambitions can be executed.

A country can produce excellent founders and still make the next stage unnecessarily difficult.

Italy introduces a different relationship between the company and its owners.

An October 2026 Bank of Italy study finds that about three quarters of incorporated Italian companies are family-owned. They are, on average, smaller and less productive, but more profitable and less likely to exit. Outside ownership transitions are associated with employment and productivity growth. These findings describe patterns, not a universal verdict on family control.

The combination matters. Preserving a business and expanding its productive capacity are related but distinct achievements.

Bocconi’s 2026 AUB report examines a different population: Italian companies with revenue of at least €20 million. It finds family control in 66% of that group and average leadership transfers around age 75 for the outgoing generation and 45 for successors. Mentoring and outside managerial capabilities are associated with stronger transitions.

These two studies should be read together without pretending that their samples are identical. They suggest a substantial opportunity to improve how ownership, authority and operating knowledge pass between people.

A family may wish to preserve its name, protect employees, maintain local relationships and avoid dependence on outside investors. Those preferences have economic value. They can support patient investment and decisions that would look unattractive on a short reporting horizon.

They can also create constraints if preserving control becomes more important than funding a valuable project, recruiting a stronger manager or allowing an able successor to act.

Succession requires more than transferring shares. Customers need to trust the new decision-maker. Employees need to know whose instructions prevail. Banks need to understand the new authority structure. A successor with the title and none of the discretion has inherited responsibility without the ability to exercise it.

France shares important continuity concerns, but it should not be casually treated as another version of Italy.

In Bpifrance’s 2023 family-business survey, 70% of family-company leaders had been in charge for more than ten years, compared with 49% in non-family companies. A separate 2025 study estimates that 370,000 French businesses with employees could face a transfer by 2030, based on owners’ intentions. That is potential supply, not a forecast of completed sales.

The latter study also identifies younger owners who want to sell because of workload or a desire to pursue another entrepreneurial project. Retirement and inheritance do not explain every transfer.

France also has a substantial population of larger businesses. Insee’s 2023 data show that large and intermediate-sized enterprises generated about 58% of value added in the non-agricultural, non-financial market sector. Counting the many small firms alone would conceal where much of the economic activity takes place.

Ferrero, an Italian-origin family group operating internationally, and Hermès, whose strategy explicitly rests on family-based ownership, provide straightforward counterexamples to the idea that tradition necessarily prevents scale.

These examples establish possibility. They do not establish what the typical family company will achieve.

Nor do the Italian and French studies provide a harmonised comparison proving that their entrepreneurs are more attached to inheritance than American owners. The defensible conclusion is narrower: continuity and succession are material economic issues, and their consequences depend heavily on governance.

The question of competence is equally important.

Creating an enterprise requires identifying a need, assembling an initial offer and winning customers before the organisation has much evidence or credibility. The founder often learns through direct contact, improvisation and personal commitment.

Scaling requires building systems that work beyond that individual. It involves choosing managers, delegating decisions, standardising what should be repeatable, measuring performance and coordinating people who never worked with the original team.

Acquisition entrepreneurship starts elsewhere. The buyer inherits a trading operation, a workforce, relationships and a record of performance. Their task is to understand what is durable, what depends on the seller and what can be improved without damaging the business.

Capital allocation is another responsibility again: selecting investments, setting return requirements, choosing financing and knowing when to stop committing resources.

These capabilities can coexist in one person. They should never be assumed to coexist merely because that person has a successful biography.

Someone who accumulated substantial liquidity in another industry may be an excellent next owner. They may also import the wrong assumptions.

A manager accustomed to a large corporation might mistake missing infrastructure for easy efficiency gains. In reality, the corporate employer previously supplied finance, legal support, procurement, brand recognition and creditworthiness. The smaller acquired company must pay for any capabilities it needs.

A financially sophisticated buyer might understand the acquisition model but underestimate technical expertise, customer relationships or the cash absorbed by growth.

Equally, an original founder can be outstanding at product creation and poorly suited to managing a much larger workforce. Recognising that limit can protect what they have built.

The right match depends on the business’s next requirements.

Stanford’s 2026 search-fund research illustrates an established route into entrepreneurship through acquiring and leading an existing company. Across the historical studies, the aggregate acquisition rate is 58%, while the median purchase price for companies bought in 2024–25 was $16 million. Those findings concern the studied search-fund population, not every acquisition entrepreneur.

The model demonstrates that an aspiring operator need not invent the initial product. It also shows that finding and completing an acquisition is a demanding task in itself.

For a buyer with money earned elsewhere, the first question should be what specific advantage they bring after completion. Relevant operating experience, sector knowledge, distribution access, disciplined investment and the ability to recruit a capable team can all matter. A larger bank balance alone supplies none of them.

The economics of the seller’s decision deserve the same scrutiny.

Consider a hypothetical company worth €20 million in enterprise value, with €4 million of net debt. Equity value is €16 million. A founder owning 80% would receive €12.8 million in a sale at those values, before taxes and transaction costs.

Now suppose the founder pursues a five-year growth plan. Enterprise value reaches €50 million, net debt is €5 million and dilution has reduced the founder’s stake to 50%. Their eventual equity proceeds would be €22.5 million.

At an illustrative 15% annual hurdle rate, €22.5 million received in five years has a present value of approximately €11.2 million. At 10%, it would be about €14.0 million.

The conclusion changes with the assumptions. The example excludes interim distributions, additional personal contributions, taxes, fees and differing shareholder rights. The future valuation is a scenario, not a prediction.

Its purpose is to demonstrate why a substantially larger future company may not automatically offer the founder a more attractive financial outcome.

Time, dilution and risk matter alongside headline valuation. In a full assessment, probabilities, financing terms, dividends and tax consequences would also matter. A founder may rationally choose liquidity even when the company has genuine growth potential.

That is where transaction design becomes more interesting than the simple choice between staying and leaving.

A primary equity issue puts new money into the company. A secondary purchase pays an existing shareholder. A deal can combine both, but announcing a large transaction value does not reveal how much capital becomes available for expansion.

A partial sale can allow the founder to diversify while retaining exposure to future growth. An external chief executive can take over operations while the founder remains involved in product development or key relationships. A family can retain ownership while changing who leads.

These structures need clear decision rights. Unresolved authority can turn a sensible financial arrangement into an operating dispute.

The buyer must also assess whether the business can finance the transition.

Reported EBITDA is only a starting point. Maintenance investment, cash taxes and additional working capital reduce cash available to lenders and shareholders. Replacing work performed by the founder or relatives may introduce costs absent from historical accounts.

A growing company can consume cash because inventory and receivables expand before customers pay. Adding acquisition debt to that situation requires particular discipline.

I would examine cash conversion, customer concentration, employee retention, recurring investment requirements, the depth of management and the sensitivity of debt service to weaker trading. I would also separate improvements achievable through operations from returns that depend on a future buyer paying a higher multiple.

The essential question is how the company performs when the seller no longer supplies the relationships, judgement and emergency intervention that previously held it together.

This is a practical reason to prepare succession before the owner is exhausted. Transferring knowledge takes time. Documenting a process helps; developing someone capable of applying it when circumstances change matters more.

There is a national economic question here, but it requires better measures than the number of founders who sell.

The founder’s proceeds, the company’s development and the country’s economic return are three different outcomes. They can move together or diverge.

A successful sale can recycle money into new ventures while the acquired business grows. It can also move headquarters, intellectual property or investment decisions abroad. A domestic buyer can strengthen a company or weaken it. The passport of the purchaser cannot settle the result in advance.

To establish whether early exits are a problem, I would track comparable firms over time: capital expenditure, productivity, R&D, exports, employment quality and the location of valuable functions. Comparisons need to account for sector, age, size and the condition of the business before the transaction.

We should also avoid turning scale into an objective detached from returns. A specialist supplier can be an excellent business at modest size. Expansion is economically worthwhile when the additional capital earns an adequate risk-adjusted return. Larger revenue accompanied by weak cash generation is not an achievement that needs public celebration.

My conclusion is that the UK article opens a broader debate about matching people, capital and control to the next stage of a business.

The evidence supports an important role for financing and governance in explaining differences in scale. It provides much weaker support for the comforting story that one country’s entrepreneurs are naturally courageous while another country’s are naturally conservative.

The opportunity is to connect capable founders who need liquidity or a different role with owners and operators who can carry the business forward. That can happen within a family, through external management, through an acquisition or through new equity.

The challenge is to make the transfer work.

We should be able to admire a founder without requiring them to remain chief executive indefinitely. We should welcome a new owner while insisting that they demonstrate more than the capacity to pay.

A founder deserves credit for the business they created.

The next owner must earn the right to shape its future.

Roberto Balbino / FINTECH SCB

Sources

Financial Times, 22 October 2026:

https://www.ft.com/content/52b728a2-3075-4310-bffb-4f17b587724d

Rathbones, research on UK business sales:

https://www.rathbones.com/en-gb/wealth-management/media-centre/fed-up-uk-founders-choose-sell-rather-scale

UK government, venture-capital evidence pack:

https://www.gov.uk/government/publications/letter-to-the-prime-minister-on-investment-in-innovative-science-and-technology-companies/uk-startups-vc-landscape-evidence-pack-html

ECB, Europe’s venture-capital gap:

https://www.ecb.europa.eu/press/economic-bulletin/focus/2026/html/ecb.ebbox202605_01~4453cc2a34.en.html

ECB, scaling European firms:

https://www.ecb.europa.eu/press/economic-bulletin/articles/2026/html/ecb.ebart202606_01~2b533feaed.en.html

Bank of Italy, family firms and succession, October 2026:

https://www.bancaditalia.it/pubblicazioni/qef/2026-1068/index.html

Bocconi, XVII AUB Observatory:

https://www.unibocconi.it/it/news/come-cambia-la-leadership-delle-imprese-familiari-italiane

Bpifrance, family businesses across generations, 2023:

https://lelab.bpifrance.fr/Etudes/les-entreprises-familiales-a-l-epreuve-des-generations

Bpifrance, business transfers, 2025:

https://presse.bpifrance.fr/transmission-et-reprise-dentreprise-un-potentiel-de-marche-eleve-mais-des-freins-a-lever-pour-faciliter-les-transactions/

Insee, the French productive system in 2023:

https://www.insee.fr/fr/statistiques/8679855?sommaire=7667330

Stanford GSB, 2026 search-fund research:

https://www.gsb.stanford.edu/insights/search-funds-keep-offering-proven-path-ownership

Ferrero, group profile and international operations:

https://www.ferrero.com/int/en/news-stories/news/ferrero-group-to-acquire-purely-elizabeth

Hermès, strategy and family ownership:

https://finance.hermes.com/en/strategy/