Exit Planning – Cost of Doing Nothing!
By: Tony McDaniel, CPA, CBI, BSN is the president of Allied Business Consultants
Most businesses simply do not sell. And for those business owners who successfully sell their company, to either an external third party buyer or internally to family members or key employees, most do so without proper exit planning. Under either exit scenario, the cost to the owner is often significant when compared to the benefits of implementing a successful exit strategy.
Without an exit strategy, the owner typically sells for too little…..by as much as 30% to 40% according to some industry statistics. Additionally, when selling the business internally to family members or key employees, the cash component to the owner at closing is substantially lower than when selling to a third party buyer.
Real costs to business owners who do not properly plan for the exit of their business include the following:
- Sale Price is often lower…..by as much as 30% to 40%
- Cash at closing to the owner is often substantially less
- Likelihood of actually selling is significantly reduced. Industry statistics show that only 10% to 30% of businesses on the market at any point in time actually sell.
- Pay more in income and estate taxes
- Owner does not control the exit process….the buyer does
- Personal and financial goals are not achieved
- Becomes a burden to the family if the owner dies
- Privacy and confidentiality can be difficult to maintain
The key to avoid or minimize the above costs is to be pro-active. Do not be a statistic. It is estimated that up to 70% of all privately held companies will transfer ownership over the next 5 – 10 years. If you are a business owner, then your business will probably fall into this statistic. If so, now is the time to take action!
Our business enhancement services are a key component to successful exit plans. Our experts are skilled in providing guidance on increasing your annual revenues and minimizing your annual expenses. The end result is an improved annual bottom line profit by as much as 100% - 200% and in turn, a substantially higher sale price for your company.
As a business owner, not only will you benefit, but your family will also benefit from your pro-active actions. You will also greatly diminish the likelihood of being a statistic of forfeiting substantial money when you exit your business. Please call us today to discuss your unique and individual objectives.
About the author: Tony McDaniel, CPA, CBI, BSN is the president of Allied Business Consultants serving Pittsburgh and surrounding areas. Tony is a Business Sales Expert focusing on assisting owners of small to medium sized privately owned companies exit their business. In addition to his 18 years of mergers and acquisitions experience, Tony previously practiced public accounting for 10 years, including prior employment with Ernst & Whinney, a Big 8 public accounting firm. Tony can be reached at 412-377-0500 or tmcdaniel@ABCbizsales.com. All discussions are kept strictly confidential.
(c) 2010 all rights reserved; ThistleSea Business Development, LLC
