Exiting a business is not so easy. It’s quite difficult, in fact, and the odds are against it happening successfully for any given business owner. Let’s take a look at an owner who I spoke with recently about his plans for an exit from his business. He admitted that the business was his primary asset and that without a successful financial outcome from his exit, his retirement plans would be seriously compromised. Despite the reality of his situation and his recognition of such, he had not made any plans for his exit.
When I pressed him for why he would let something as important as planning for the largest financial transaction of his life go unattended, the best answer that he could give was that nobody was offering to help him with it and it seemed too overwhelming to handle on his own. After all, as a successful business owner his ‘job’ is to build his company and increase his cash flows, not to plan for his exit. And from that short story we get a glimpse of what millions of business owners across the country are facing as the leading baby boomers turn 65 this year and are seriously thinking about retirement. In addition to the sheer number of owners that are needing this service, also consider the following:
So, what does it mean to help a business owner manage their wealth? Well, for me it meant helping owners navigate this complex decision-making process and to get on a path toward defining and achieving their goals. This is what our industry, generally speaking, calls ‘exit planning’.
An exit transaction is going to be the largest financial transaction of this owner’s life. In fact, without exaggerating, this financial event is more likely the largest financial transaction within the family tree for that business owner and has the opportunity to provide wealth for generations to come.
The difference between a successful business exit and an unsuccessful one boils down to whether a business owner will have a family legacy or a family secret. Legacies are wonderful. But when a lack of planning creates a substantial loss of wealth many observers ask the question that seems so obvious in hindsight, i.e. ‘why didn’t that successful owner know enough to make plans to avoid such a terrible outcome?’
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