The Advantages of Exit Planning: Secure Your Legacy and Maximize Your Wealth
By Sara Craven, CFP®, CEPA®
April 29, 2024
As a Certified Exit Planning Advisor™ (CEPA), I am committed to helping my clients navigate the complex world of business transitions and secure their financial legacies. I want to shed light on the pressing need for exit planning by sharing some eye-opening statistics and highlighting the tremendous opportunities that lie ahead. Let’s delve into the numbers and explore the reasons why exit planning is an imperative step in securing your future.
According to the Exit Planning Institute’s 2023 National State of Owner Readiness Study, 70-80% of businesses put on the market fail to sell. This staggering statistic serves as a wake-up call, reminding us of the importance of thorough exit planning. 30% of business owners are not even familiar with the various options available to them, leading to missed opportunities and potential financial setbacks. Furthermore, a significant 78% lack a formal advisory team, leaving them vulnerable to missteps and costly errors. As we delve deeper, it becomes evident that the lack of a written transition plan affects 59% of business owners, while 9% have not planned for their exit at all.
In the face of these alarming statistics, it is essential to recognize the tremendous opportunities that lie ahead for legacy creation within a family. Baby boomers, who own 51% of private businesses in the U.S., are set to retire in droves over the next 10 years. This mass exodus equates to the transfer of 4.5 million businesses and an astonishing $14 trillion worth of wealth. This wealth transfer presents a unique and unprecedented window of opportunity for business owners who have prepared diligently for their exit.
To navigate the complex world of exit planning successfully, it is crucial to adopt a proactive approach. Here are four vital steps to take:
Foster a Team: Building a capable advisory team is essential to ensure a smooth transition, avoid pitfalls, and maximize the value of your business. Seek professionals specializing in exit planning who can guide you through the intricate process.
Be Aware of Your Options: By understanding the importance of exit planning and the potential risks involved, you empower yourself to make informed decisions. Lean on the team forged in point one above to be educated on the various options.
Adopt a Process: Develop a written transition plan that outlines your goals, identifies potential challenges, and identifies strategies to mitigate risks. This plan should also include a formal life after plan, ensuring that your personal and financial aspirations are met beyond the transition.
Set Appropriate Expectations: This will take time and diligence. Being open to the process (and guidance of your professional team) should enable you to achieve a great outcome but you will need to set your expectations appropriately.
The need for exit planning is undeniable. By acknowledging the alarming statistics and taking proactive steps, you can chart a course towards a successful transition. Seize the incredible opportunities that lie ahead, leverage the expertise of a skilled advisory team, and adopt a comprehensive process to safeguard your future. Remember, it’s not just about managing wealth; it’s about shaping the legacy you leave behind.
Source: Exit Planning Institute, 2023 National State of Owner Readiness Report
This content was produced and provided by an unaffiliated third party entity. We are providing this video as a convenience only and such provision does not imply that Sand Hill or any of our employees, officers, or directors endorse, sponsor, approve, or guarantee any content in this video. Please also reference this chart, which should be reviewed prior to or contemporaneously with the video. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities listed in the chart.
Articles and Commentary Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA. For disclosures, including additional information on credential designations of SHGA representatives please see our Form ADV Part 2A and 2B Disclosure Brochures, which can be obtained by clicking here: https://www.sandhillexperience.com/advform
Video Presentations All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
