Business Owners Are Not Prepared To Sell, Scale or Cash Out / by Kerri
Irrefutable statistical evidence confirms that business owners are not prepared for the current market window to sell a business 2013 – 2018.
To take advantage of this sellers window, business owners need to get started formalizing a strong business foundation (e.g., strategic planning, contingency planning, succession planning, transition planning) at the same time as they balance accelerating growth and optimizing value in the business itself.
The research to date suggests that most business owners do not believe this strategic effort is important for them, their company, their team or their family’s future. Just to recap:
- In a 2008 research report entitled Business Transition/ Succession, research by ROCG Americas LLC confirmed that CEOs lack urgency because of the belief that “we can always do it tomorrow – a general feeling of invulnerability.” Survey participants’ No. 1 excuse for not having a written plan is still the same in 2013.
- In the Canadian Federation of Independent Business (CFIB) survey in 2005, “the No. 1 reason given for not having a written plan was that it was too early to plan. This reply was head and shoulders above every other reason given.” Yet, this feeling is contradicted by the facts which show that time is not necessarily on the side of the selling owner.
- Findings by the Mutual Survey of American Family Business in 2007 confirmed the statistical lethargy: “Almost a third have no plans to retire, ever; and another third report that retirement is more than 11 years away. Since the medium age of the current leaders is 51, this means that many people plan to die in office.”
- PricewaterhouseCoopers states in its 2007 report on Canadian businesses succession plans that owners over age 50 “seem unwilling to seriously look into options to transition ownership before they are forced, by age or illness, to give up the business.”
- A full 34% of the CEOs over age 60 in the ROCG 2008 study felt that it was still too early for them to plan their exit!
This “feet first” plan of going out with their boots on (providing no liquidity event, no succession planning, and no future for employees when they close the business) is prevalent. Not planning for the inevitable is equally absurd and irresponsible. And yet this is what 95% of all business owners do.
They are murdering their business. And it is totally preventable.
Change does not come easy or fast. To truly maximize the value of your business and walk away with the highest returns, you need to commit to a 2-5 year timeline that gives you the leverage you can’t get after a trigger event (health, family requirement, corporate or market changes, etc) precipitates your exit.
It’s never too early or too late to plan your exit. Our team at This Way Out Group LLC will take away the fear and frustration and facilitate the exit process and timeline with you.