Exit planning has become an increasingly relevant and important topic. In the U.S., Baby Boomers account for an estimated 2.3 million small businesses in the U.S., and a large number of these businesses are thriving. However as they near retirement, nearly 60% of Baby Boomer-owned small businesses do not have succession or transition plans in place (Unsexy But Thriving Businesses: The Hidden Opportunity Gifted To Us By Baby Boomers, Forbes, Jan. 2022).
Recently, the International Business Brokers Association and M&A Source (IBBA and M&A Source) conducted research to determine the reasons these owners have decided to sell their businesses. While 36% of the business owners reported retirement as the main motivating factor, almost 50% reported a combination of burnout, health and COVID-19 as motivating factors.
Notwithstanding the reasons, most business owners reported that they have no formal plans regarding how to retire or exit from their businesses.
Baker Tilly’s point of view on exit planning is based upon Peter Christman’s seminal work on the topic. Christman, co-founder of the Exit Planning Institute, is an icon in the world of exit planning. Author of three books, “The Ten Trillion Dollar Opportunity,” “The Master Plan” and “Master Planning Success Stories”, Christman literally invented the discipline. His process focuses on developing an exit plan in three distinct areas to: 1) maximize the value of the business, 2) define a personal financial plan and 3) create a life plan for post-transaction.
Rooted in Baker Tilly’s mission of enhancing and protecting our client’s value, working as Value Architects™ we develop a comprehensive, integrated blueprint with our clients. We work side-by-side to:
- Define the roadmap for the family enterprise
- Address the desires and requirements of the family enterprise – ownership group of the family business(es), the family-owned operating company and individual family members
- Enhance and protect the value of the family enterprise as well as the net worth of the individual family members
Nine key building blocks
While each exit plan is as unique as the business for which it is designed for, the three pillars of our Value Architect™ model for exit planning include nine key building blocks that allow family owners to leave their businesses when they want, for the money they need and to whomever they choose.
Conclusion
Baker Tilly’s Value Architect™ model for exit planning addresses the three constituencies of family enterprise/ownership group, family-owned operating companies and individual family members in order to provide a complete and successful exit plan. Now’s the time to consult a professional and get a formal transition and third act plan in place.
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