Are Baby Boomers Ready to Exit Their Businesses?

Here’s an article I thought you would find interesting. The article, Are Baby Boomers Ready to Exit Their Businesses? was written by Barbara Taylor and was originally published in the New York Times on the 11^th of February of 2011.

After reading the article, I ask that you answer THE questions: Are you a baby boomer ready to exit your business with an Exit Strategy in plan?

-Joan

Are Baby Boomers Ready to Exit Their Businesses?

Many of us who offer financial services linked to retirement have been anticipating the day when the largest wealth transfer in our nation’s history officially begins.  Yet there is no shortage of articles proclaiming that people born from 1946 through 1964 are ill-prepared for retirement.
“They are afflicted with a business disease that is caused by a lack of exit planning,” said Peter Christman, founder of the Exit Planning Institute and author of “The $10 Trillion Opportunity: Designing Successful Exit Strategies for Middle Market Business Owners.” By Mr. Christman’s estimate, as many as 75 percent of all business owners are afflicted with the no-exit-plan disease.
According to a 2008 study conducted by Atlanta-based White Horse Advisors and Vistage International, 96 percent of boomer business owners agreed that having an exit strategy was important – but 87 percent did not have a written plan.

While business owners certainly aren’t the only people guilty of poor planning, boomers anticipating selling a business as they approach retirement in the coming years may be faced with a double whammy: lack of planning and a glut of supply. “This is a landmark moment in our generational development,” said Patrick Ungashick, president of White Horse Advisors, and author of “Dancing in the End Zone: The Business Owner’s Exit Planning Playbook.” According to Mr. Ungashick, 9 million of America’s 15 million business owners were born in or before 1964, resulting in one business owner turning 65 every 57 seconds – and the potential for a tsunami of businesses for sale.
Both Mr. Christman and Mr. Ungashick believe that many of these Boomers have a disproportionate share of their wealth tied up in their businesses. “If these sellers don’t start planning now, they will be sorely disappointed,” Mr. Christman predicted. Both Mr. Christman and Mr. Ungashick recommend that business owners work with tax, legal and exit planning advisers.

Mr. Ungashick encourages business owners to identify areas of transferable value in their businesses. These include management, financial controls, systems, and customer concentration. He noted that not having an exit plan can undermine what he calls legacy aspirations. “Owners have goals and values that they founded the business on,” he explained. “They don’t want to see them kicked to the curb.”
Time will tell whether retiring Baby Boomers exit their businesses with a victory dance, or a shuffle of disappointment. One cause for optimism: Boomers have a tendency to re-shape entire industries. Perhaps it will be their retirement that transforms exit planning from an obscure financial tool to a business best practice.

Note: Barbara Taylor is a New York Times blogger and co-founder of Synergy Business Services in Bentonville, Ark.  This abridged article was originally published in the New York Times on February 11, 2011.

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