Over the next 15 years, the U.S. economy will experience an unprecedented increase in the number of businesses for sale as baby boomer entrepreneurs begin to retire. The result? A glut of available businesses and downward price pressure for most privately owned companies.

Recent studies by PriceWaterhouseCoopers, MassMutual and Marquette University showed that one out of two businesses will change hands between 2006 and 2016. Tragically, that same PriceWaterhouseCoopers study revealed an approximate 75% of private business owners with no strategic exit plans in place. An additional 25% have done little or no estate planning.
 
Clearly, it’s time for you, as a business owner, to focus on doing everything you can to increase the attractiveness, value and salability of your business by creating an exit plan.
 
Why create an exit plan and why do it sooner than later? It’s simple. Exit planning delivers tangible results for savvy business owners.  A well-written exit plan is a comprehensive, integrated plan that asks and answers all of the personal, business, legal, financial, tax and estate issues that are involved in exiting from a privately owned business.  It also provides you with the peace of mind in knowing you are being proactive and taking charge of the future, rather than waiting passively to let the future take care of itself.
 
Good Reasons to Start Now
 
·         The oldest of the baby boomers was born in 1945 and is now 60 years old.  The youngest of the baby boomers was born in 1961 and is now 44.
 
·         By 2009, the number of business owners wanting to sell their businesses each year will have increased fivefold over 2004.  This trend will continue for the next 10 to 15 years.
 
·         Selling your business during the first half of the “baby boomer bubble” (2005-2010) will provide the best chance of maximizing its value because the younger baby boomers who are retiring from corporate jobs will be active buyers. In the later half of the baby boomer bubble these new entrepreneurs will also be looking to exit.
 
·         It takes approximately two years of focused activity to get your business ready to sell at a reasonable price.
 
·         We currently are experiencing the lowest capital gains tax rates in 60 years. 
 
When proper exit planning is done and ample time is allocated to implement the plan--business owners are often able to reduce or, in some cases, eliminate the capital gains taxes due at the time of sale.  This dramatically increases the after-tax net proceeds that owners keep.
 
When you really think about it, deciding how and when to exit your business could possibly be the single most important financial and personal decision you’ll make in your lifetime.
 
Why wait?
 
By: The Exit Planning Institute © 2008