Hidden Facts: Did You Know That . . .

  • 64% Baby Boomers, aged 51 to 69. This means that qualified buyers are increasingly in demand.
  • 80% of all businesses with $3 to $10MM in sales, and, 50% with sales of $10 to $50MM never go to closing. The #1 reason, according to a PricewaterhouseCoopers study, is lack of planning.
  • 47% of businesses fail due to death or disability.
  • Business owners depend on the invested equity from their business to fund 93% of their retirement.
  • Most business ownership transition experts report that it takes 20-30 months to prepare a business and the business owner for a successful ownership transition. Management transition typically takes longer to prepare for.
  • Most business owners overlook the importance of preparing personally for ownership or management transition. Many are not prepared mentally, or, don’t have the facts about what they will need to walk away with to support their lifetime income and capital needs. Most fail to factor in inflation and taxes for their entire post-exit lifetime.
  • Most business owners have no idea or have misconceptions about the tax liabilities associated with ownership transition.
  • Many business owners have incorrect or outdated information about the value of their business. There are at least 20 values associated with a business at any one point in time. The value that your banker, CPA, or even a credentialed valuation preparer gave you might be incorrect for what you are trying to accomplish.
  • Many business owners underestimated the impact on value of the 50 value drivers. Some of these issues can be corrected quickly, and, some will take a few years.
  • Many business owners overlook the impact that outdated, non-existent, poorly drafted, or conflicting estate planning documents have on management or ownership transition. Properly addressing these issues could take as much as 24 months.
  • Many businesses will not go to closing due to employee issues that surface during negotiations to sell the business.

Many business owners misunderstand what ownership or management planning, also known as exit planning, really is. It is a complicated process that addresses both personal and business issues to insure a successful transition of ownership or management. It requires a team with the right expertise and an experienced team leader. It usually takes 20-30 months to complete the process before executing a management or ownership transition strategy.

Will you and your business be ready when it’s time to leave (voluntarily or involuntarily), or, when the ideal acquirer approaches you unexpectedly? Now is the time to prepare, before you have a discussion with interested parties.

Call us today at (806) 747-2644 to start planning for your future

Contact Us Now!