How do you plan a transition for business and family?
After decades building your business, how do you avoid throwing it all away at exit?
You have spent decades doing whatever it took to build your business into something you are proud of — something that supports your family and your employees, serves a loyal customer base, and earns respect in your community and industry. The next generation of leadership is growing into their roles. Yet the hardest question remains: after all your efforts, are you going to throw it all away at the exit? For most owners, the answer depends entirely on whether they plan the transition holistically and early.
Why is the Baby Boomer transition wave so significant?
Baby Boomers, ages 56 to 75, own two-thirds of the privately held businesses in North America, representing an estimated $10 trillion of value. Whether you plan to retire or not, if you are a Boomer business owner the reality is that you have less than 14 years remaining before you — voluntarily or involuntarily — cease to be the driving force of the business. The questions that follow are unavoidable: Will your business survive without you? Will it thrive? Will you and your heirs become the benefactors of life-changing wealth? And what will you do in the first days, weeks, months and years of your retirement?
What do the statistics say about business transitions?
The odds favour those who plan and punish those who don't:
- One-third of family businesses survive through the second generation
- One-fifth of businesses put on the market end up being sold
- Three-quarters of business owners have no formal transition team
- Four-fifths have no written transition plan
- Half have done no planning at all
- Most business owners have no formal life-after-business plan
- Many who exit their businesses “profoundly regret” that decision within the first year
How do you avoid a regretful outcome?
Take personal responsibility for the next stage of your life's journey and personal growth. Owners who successfully transition work simultaneously on three fronts:
1. The transferability of their business (business succession planning)
2. Their personal and family wealth picture (financial, tax and estate planning)
3. The personal questions of who they will be and what they will do when they are no longer leading the business
Leaders who address all three are the ones who successfully transition the business — to family members, employees or the best possible strategic or financial buyer at the right price — and who personally enjoy a new phase of life and purpose.
What does a different kind of growth plan look like?
It is time to create and implement a different kind of growth plan. A combination of expertise and experience — legal, tax, accounting, wealth and sell-side advisory — along with a personal coach and a peer-to-peer group of founders, entrepreneurs and executives who have already traveled (or are about to travel) a similar path can make all the difference. Advisors who know you, your business, your best personal interests and the path to continued growth help ensure the continuation of the business and unlock for you and your family the value you have created.
Where do you start?
Start with a business valuation. A free business valuation guide is available exploring valuation preparation, valuation methodologies, valuing intangible assets, valuation mistakes to avoid, and the distinction between price and value — along with an exclusive offer to receive a confidential custom business valuation. Additional insights, newsletters, events and free resources are available at sellingyourcanadianbusiness.ca.
Key facts: avoiding a regretful business exit
Boomer ownership: own two-thirds of privately held North American businesses, ~$10 trillion in value
Time horizon: less than 14 years before a typical Boomer owner ceases to be the driving force
Second-generation survival: only one-third of family businesses survive it
Sold on the market: only one-fifth of businesses listed actually sell
Planning gaps: 75% have no transition team, 80% no written plan, 50% no planning at all
Regret: many who exit profoundly regret the decision within the first year
Three fronts to plan: business succession, personal/family wealth, and life-after-business identity
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, financial or estate-planning advice. Consult qualified advisors regarding your specific circumstances.
