Boomers are Moving On Current Status In Canada the Boomers were born during the period from 1947 to 1966. The Boomers have been very entrepreneurial and their time has come. It is their time to move on. From 2006 to 2016 between 34% and 55% of privately-held companies will change hands – mostly boomers. As a result there will be huge downward pressure on price for these privately-held companies. While there will be buyers, with plenty of cash, there will be plenty of options for them – it will be a buyers’ market. The current market for selling such businesses has been distorted since the severe downturn 4 years ago as there are now companies which would have sold years ago but deferred while they got back on their feet. Lack of Planning Family-held businesses are in for some surprises - sons and daughters who are not interested in taking on the responsibility of running the company. Seventy-five percent do not have any exit strategy in place. Too many have done little or no estate planning – recipes for disaster. Maximizing wealth and minimizing taxes have been forgotten. If you want your business to successfully transition to a family member or a third party, careful positioning and planning have become paramount, more important than ever before. A good exit includes an integrated plan resolving personal, business, legal, financial, tax and estate planning issues. These ingredients take time whether involving family or third parties. Strategic Planning You and your business need to focus on improving profitability, building an effective management team and many other factors to make your business more attractive and maximize your after-tax selling proceeds. Preparing the owner includes taking steps to address financial issues and emotional issues. Lack of preparation of the psychological side of selling your business will lead to future problems in too many cases.
1. Boomers are Moving OnCurrent StatusIn Canada the Boomers
were born during the period from 1947 to 1966. The Boomershave been
very entrepreneurial and their time has come. It is their time to
move on.From 2006 to 2016 between 34% and 55% of privately-held
companies will changehands mostly boomers. As a result there will
be huge downward pressure on price forthese privately-held
companies. While there will be buyers, with plenty of cash,
therewill be plenty of options for them it will be a buyers
market.The current market for selling such businesses has been
distorted since the severedownturn 4 years ago as there are now
companies which would have sold years agobut deferred while they
got back on their feet.Lack of PlanningFamily-held businesses are
in for somesurprises - sons and daughters who arenot interested in
taking on theresponsibility of running the company.Seventy-five
percent do not have anyexit strategy in place. Too many havedone
little or no estate planning recipes for disaster. Maximizing
wealthand minimizing taxes have beenforgotten.If you want your
business to successfully transition to a family member or a third
party,careful positioning and planning have become paramount, more
important than everbefore. A good exit includes an integrated plan
resolving personal, business, legal,financial, tax and estate
planning issues. These ingredients take time whether
involvingfamily or third parties.Strategic PlanningYou and your
business need to focus on improving profitability, building an
effectivemanagement team and many other factors to make your
business more attractive andmaximize your after-tax selling
proceeds.Preparing the owner includes taking steps to address
financial issues and emotionalissues. Lack of preparation of the
psychological side of selling your business will leadto future
problems in too many cases.
2. Why Plan Now? By 2009 there will be a five-fold increase
over the number of businesses sellingcompared to those for sale in
2004. There may be more cash-rich potential buyers available in the
first half of theboomer bubble (a 10 year period) from 2005 to
2010. The economic cycle is good currently, creating a good selling
atmosphere. It takes 1 to 2 years of focused activity to get your
business ready to sell. We are currently experiencing the lowest
income tax rates in the last 35 years.There is a pay-off for those
that get an early start. It is possible that you will get
asignificant premium over the price of unprepared sellers. Good
planning can alsoreduce and/or defer the income taxes at the time
of the sale. The most overlookedbenefit of good planning is the
Peace of Mind of the owner/seller.Take charge, after all the
process of selling your business just may be the mostimportant
decision that you make in your life time.Getting StartedGet
informed. See your professional advisor at MacKay LLP to develop a
plan that mayalso include a lawyer, insurance broker and financial
planner.