A business transition is a complex process – whether you’re selling to an outside buyer or transferring your business internally. It takes a lot of careful planning and generally requires a number of years to be executed successfully.Read More
“While 54 percent of business owners plan to leave their business in the next 10 years, 72 percent [of those] have taken no exit planning action,” according to a recent study. For most business owners, their business is by far their largest asset, and not properly planning for its transfer can put them, and their employees and family members, at risk. Being prepared is the key to success. It starts with owner education, allowing enough time to plan, seeking the best advice, and creating a Business Ownership Transition Plan (BOTP). A BOTP is a comprehensive written document that outlines how and when the ownership of a business will be transferred to others, either internally or externally, in order to achieve the owner’s long-term financial and personal goals.
This is the story of a business owner, Roger, who was very involved in his business when we met. He had just turned 70-years young, which prompted him to think about life beyond the business.
In this case study, you will learn about how a Business Ownership Transition Plan (BOTP):
- Helped Roger find and negotiate the best possible deal
- Helped Roger achieve both his financial and personal goals
- Ensured that Roger's business continued to succeed even after his sale of the business
Business owners put off internal transition planning for many reasons, as we talked about in Top 3 Reasons Why Business Owners Don't Do Transition Planning. As a business owner, you've spent much of your life building a successful business, and it's probably difficult to think about passing it on to someone else. And oftentimes, owners become overwhelmed just thinking about it. However, the reality is, you will leave your business one day, whether it’s voluntarily or not. You may leave due to retirement, disability, or even business failure. Unfortunately, many business owners believe they can worry about a business transition plan at another time only to find out the hard way that later is too late.
For the first time, baby boomer retirement is the number one reason driving business sales for the Main Street (companies with values < $2 million) and lower middle market (companies with values between $2 million and $50 million) sectors, according to the fourth quarter 2012 Market Pulse Survey Report by the International Business Brokers Association (IBBA) and M&A Source.