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By John Chionchio

This country is on the verge of an economic wave like we’ve never seen before. Baby Boomers are the most affluent generation in our country’s history. They hold approximately 60% of the nation’s wealth. There are six million privately-owned business in the United States, 67% owned by Baby Boomers. A recent survey by the Exit Planning Institute showed that 76% of them intend to exit in the next seven years. If you do the math, that’s three million of them. Trillions of dollars are at stake!

There’s a social wave in motion too. Boomer behavior is changing, almost daily, as they realize how important it is to plan for succession. They are quickly learning that operating the business day-to-day is a very different thing than monetizing it for full value upon exit. They’re figuring out that if they don’t monetize for full value, their retirement and legacy won’t be what they expected after decades of effort.

True succession planning is complex and multi-disciplinary. It goes way beyond any one area of professional expertise; business operations, tax planning, entity structures, asset protection, growth initiatives, leadership team development, legal concerns, estate/wealth transfer planning, family governance… and the list goes on. The most critical skills are “soft”, all about people and relationships that drive decision-making. True succession planning is learned experientially, and it takes a lot of reps. You can’t take a one-week certification course and suddenly have the skills.

There is a window in time to maximize what you get from your business. Business owners don’t choose advisors because they can do what everyone else does, or because they just like them. They want advisors who are on the leading edge of things that affect them. They want and need their advisors to be thought leaders who see threats and opportunities before the masses. Yet only a tiny fraction of advisors have actually crafted and implemented a succession plan, so business owners wait too long to achieve best outcomes.

Whether you will gift your business to your children, sell it to a third party, sell to an ESOP, execute an inside transfer to management or simply recapitalize it, maximizing the transferable value is always in your best interest and the best interest of those who will take over your business when you move on to the next chapter in life. This is precisely why succession planning is such a critical point for any operating business.

If you haven’t begun the process of setting up your business for a successful exit and transfer, consider this. The truth is that the longer you wait the fewer your options and the more compromised your outcomes will be. So, my advice is simple. Start now while you still have the time to get everything you can from your business after all your hard work, risk and investment.

September 18, 2023 in Estate Tax, Know your story, Legacy Planning, Succession Planning

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