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Exit Strategies Newsletter
May 5, 2015
The Expected Wave of Exiting Owners
It is estimated that trillions of dollars of net worth from private
businesses will be transferred between now and 2030.
With the largest generation in our country's history entering
retirement age, and many of the nation's private businesses
owned and run by Baby Boomers, the expected wave of
exiting owners will change the landscape for the transfer of
privately­held businesses.
How will this potential over­supply dilemma impact your ability to transition out of
your business?
Baby Boomer Owner Statistics According to a study from the Pew Research Center, 26% of the total U.S.
population are Baby Boomers. Moreover, the 2011 study says that "roughly
10,000 Baby Boomers will turn 65 today [69, adjusted for time since the study], and
about 10,000 more will cross that threshold every day for the next 19 years." That
is roughly 3.6 million people per year and by 2030, all members of the Baby
Boomer generation will have reached the age of 65. *
The Case for Planning Prior to An Exit Given the statistics just presented, a strong argument can be made for planning
prior to attempting any future business transition. A comprehensive and
customized exit strategy plan for you and your business is likely crucial to
achieving a satisfactory outcome. A Lack of Potential 'Buyers'
When we discuss the supply of businesses coming onto the market, it is also
helpful to forecast potential interest and demand. A buyer can be both an outside
party or an insider (or group of insiders). Planning in advance will help to gain an
understanding of the potential buyers and structures that might produce the best
outcome.
New Generation One of today's challenges with selling to insiders is the cultural difference in how
the Boomer generation perceives work and the business they've built and how the
next generation approaches this same concept. In short, the generation behind the
Boomers doesn't want to work in the same manner, creating more of an imbalance
between the number of business owners needing to sell or transfer and the
number of interested buyers.
Planning for this Wave is a Team Event Developing a comprehensive exit strategy may be one of the largest financial and
emotional decisions in your life. It should be viewed as a "team" sport. This is not
the time to be "penny wise and pound foolish". Select advisors with knowledge
and experience from multiple disciplines. Pick a good quarterback to lead the
team.
Concluding Thoughts With such an unprecedented number of exiting owners predicted to leave their
companies, the need for a comprehensive and well­planned exit strategy has
never been more important. We have worked with several hundred business
owners to successfully prepare for and exit their businesses. The most successful
transitions also require time ­ give yourself the time to build your strategy.
So, how will you ride the wave?
Regards,
Cam
[email protected]
*Pew Research Center Our last client is as important as our next.
Carlson Hammond is a consulting and financial services practice
specializing in the development of business exit and succession plans
for owners of private businesses. Cameron M. Carlson JD, CFP, CLU
Principal Carlson Hammond Phone: 415.256.8960 [email protected]