Half of business owners have done nothing about planning their exit strategy. As the population greys, unprecedented numbers of them will be retiring in the next few years, but appear to have done nothing about succession planning.
Keeping wealth going demands appropriate attention, say accountants and business advisors Baker Tilly International. They note the baby boomers will retire and move out of full-time management of their businesses soon, with these companies worth trillions of dollars.
It’s easy to glaze over at the mention of succession planning, as yet another private banker drones on about tycoons, but it’s a big issue for many family- and privately-owned businesses, regardless of whether they are in the super-rich bracket. They too want to pass on something worthwhile to the next generation, and leave a lasting legacy. We all know that men especially hate facing mortality and often think making wills and facing up to it is tempting fate, but if you have assets, it has to be done. As Baker Tilly point out: it involves recognising and coming to grips with many complex family, individual and business issues in the evolution process.
It’s an old message but one that needs repeating - business owners approaching retirement should act now as succession planning process can take up to five years to sort out. Throw a few stroppy family members into the mix and it can become a real headache. “Failure to plan ahead, delaying or leaving it too late can diminish the value of the business,” they warn.
According to Baker Tilly’s Global Family Business Succession survey International, 57% of family business owners expect the business to stay in the family. Another 27% plan to sell it, leaving 16% dithering.
There’s no one size fits all and each business is different, with options ranging from outright sale to a third party; transfer of day-to-day management to family members, along with some form of ownership control; sale of the business to a management team; or closure because it all got left too late.
When to start succession planning?