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Within the next 20 years 90 million Americans will be
retiring. The “Baby Boomer” Generation (people
born between 1946 and 1964) has dominated the marketplace
and demographics suggest that there will be a 10 trillion
dollar transfer of wealth in the next 10 – 15 years.
The majority of this wealth is held as stock in privately
owned businesses; over 70% of these businesses are expected
to change hands. Succession planning will be essential
to the continuing life of these businesses, and to these
owners realizing the greatest return on their life’s
work and/or ensuring their legacies. A well-designed plan
should:
1. Control how the owner exits the business.
2. Maximize company value in good times and bad, and
minimize, defer, or eliminate the tax burden incurred
by the ownership transfer.
3. Retain control by generating a number of strategic
exit options.
4. Reduces the stress on the owner as well as the
stress on their employees and families.
5. Ensure that the owner achieves his or her business
and personal goals as well as ensure continuity of
the business. |
Failure to properly plan can allow a host of problems
to occur. Here are just a few problems the owner may be
forced to face without a proper plan in place:
1. Exiting the company as a result of pressure from
outside circumstances, not as a result of his or her
own desires, and on a timetable that’s forced
on the owner instead of one that meets his or her
needs.
2. Urgency and a forced situation can cause the business
to be devalued or sold at a discount because the owner
loses the leverage of flexibility.
3. Negative tax implications can be overlooked or
unavoidable in a forced situation.
4. Suddenly options are limited and decisions are
dictated by time rather than desires and goals.
5. Stress levels are much higher in a forced situation
than during the execution of a well-thought-out and
organized plan.
6. Confidentiality can be breached and value can be
lost if time forces the process to go public before
preparations and plans are made to protect the business. |
The MidAtlantic
Method of accomplishing these objectives is a
multi-step process. A complimentary first meeting is held
to ascertain basic information about the owner and his,
her, or their goals and to explain the process and associated
costs. Next, the owner will need to participate in a comprehensive
questionnaire that delves in great detail into the specifics
of the business and the owner’s goals. We then assimilate
all of the relevant facts and generate a plan that recommends
the best exit method and the steps necessary for implementation.
At MidAtlantic Business Advisors we have
the experience and expertise necessary to assist any owner
of a mid-market business through the process of exiting.
There are twenty-six ways to transfer ownership of a privately
held business; we are well aware of the pitfalls and advantages
of each. We will design a plan that will best meet your
goals and that will most effectively “guide you
to whatever is next”. If you are even beginning
to think about exiting your business, contact
us.
©2006 by MidAtlantic Business Advisors
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