Wednesday, April 8, 2009

Are you ready to exit?

From our Kent Frese, LMI partner in PA, who specializes in Exit Planning.

http://www.teamlmi.com/Latest/are-you-prepared-to-exit-your-business.html

Do you have a plan to exit your business on your terms? There are three key areas that need to be examined and strengthened: financial, management and legal.

You may want to consider the following from a recent PricewaterhouseCoopers Family Business Survey for 2007/08:

"..While many entrepreneurs happily devote their time and energies to building a business, they pay less attention to what will happen when they are no longer running the show. They find it difficult to address issues like illness, incapacity, retirement and death, and therefore postpone dealing with such problems..."

  • One-quarter of the family firms in the survey are due to change hands within the next five years.
  • Half of those companies are expected to remain in the family. Yet almost half of all responding companies have no succession plan, and the percentage is even higher in small firms or those that have been in business for fewer than twenty years.
  • A surprisingly high percentage of family business owners have also failed to gauge their potential tax exposure, and are unaware of the domestic capital gains tax or inheritance tax liabilities they may have accrued.
  • Eighty-four percent of the respondents aim to pass their companies on to their descendants.
  • Two-thirds of family businesses have no defined criteria for choosing which family members who want to take an active role in the company should be allowed to do.
  • More than half also employ relatives without requiring them to compete for their jobs on the open market.
  • More than two-thirds of companies in the survey had no procedures in place for dealing with disputes between family members.
To learn more about Exit Planning, contact me or Kent to discover how you can control the process!

2 comments:

Unknown said...

Really useful points about exit planning. I'm a business broker in Boston and often deal with family-run businesses. I've attached a link below to an article I wrote, giving some tips for what to do when the family members are in conflict. I hope it is of help. Thanks again for the useful information.

Selling A Family Business When The Owners Are At War:
http://blog.coral-group.com/2009/05/14/challenges-of-selling-a-family-business.aspx


My best,
Sam Liss
The Coral Group Business Brokers

Leadership Management of Central Ohio said...

Great article - lots of interesting and fun challenges when preparing a business for an exit.