White Horse Advisors Announces Results of Its 2008 Survey of Closely-Held Business Owners

According to Americas Entrepreneurialist Generation: Exit Planning and the Baby Boomer Age Wave 53 Percent of Baby Boomer Business Owners Intend to Exit in the Next 10 Years; Yet Only One in 10 Has a Written Exit Plan

ATLANTA--()--White Horse Advisors, LLC, an independently-owned provider of financial advisory services to owners of closely-held businesses and retirement plan sponsors, announces the results of its 2008 Survey of Closely-Held Business Owners. The survey, titled Americas Entrepreneurialist Generation: Exit Planning and the Baby Boomer Age Wave, was conducted in cooperation with Vistage International using a random selection of business owners across the U.S. A total of 58 groups participated in the study, representing 444 survey respondents. Full survey results may be viewed at www.exitplanningresearch.com.

The implications of these results are far reaching. We face a tsunami wave of baby boomers selling, closing or passing along their businesses in the next 10 to 20 years, said Patrick Ungashick, founding partner of White Horse Advisors. Closely-held businesses account for nearly half of private sector payroll and approximately 80 percent of net new private sector jobs in the last 10 years. Therefore, we can expect this trend to impact not only owners, employees and families, but the economy as a whole.

The survey shows that business owners overwhelmingly recognize the importance of an exit strategy, but in nearly every important area they are not prepared for their inevitable exit. On the surface, it appears that the lack of preparation may be attributed to the belief that the need to plan for exit can wait until only a few years before the target date. However, even the oldest owners surveyed stated they are unprepared in most areas. So the true culprit appears to be procrastination and uncertainty regarding the proper steps to take. The inevitable wave of baby boomer business owners seeking to sell their businesses may face a supply and demand problem a larger number of owners seeking to exit than the supply of buyers.

Summary results of the survey include:

  • Nearly all owners say it is important to have an exit plan, but few do. The vast majority of business owners (more than nine in 10) agree that having an exit and succession strategy is important for their future as well as the future of their business. However, just shy of nine in 10 owners do not have a written, up-to-date exit plan.
  • Nonetheless, half of owners surveyed have an aggressive timeframe for exiting their business, indicating that they will leave their business within the next 10 years. Owners who are 60+ years in age have the most aggressive exit planning timelines, yet two-thirds of them do not have an exit plan.
  • The number of years to exit plays a role in how much attention owners have given to exit planning. Owners who consider themselves more than 10 years away from their ideal exit date have given the matter less attention than those within 10 years of exit.
  • The average number of years from now to exit among owners surveyed is 7.7 years. The vast majority of owners believe that achieving their ideal timeframe for exiting their business is attainable.
  • Business owners say that maintaining focus on the growth of their business is a major reason why they have not spent more time on exit planning to-date.
  • At least two-thirds of owners indicate that their top three essential or important exit planning objectives include:
    • Achieving personal financial security
    • Maintaining harmony within my family
    • Achieving the maximum value for the business
  • Business owners primary concerns around exit planning appear to be universal. Approximately eight in 10 owners say that minimizing taxes, adequately determining the value of the company, and meeting other part-owners objectives are a major concern or somewhat of a concern.
  • Ninety six percent of baby boomer business owners agreed that having an exit strategy was important, but 87 percent do not have a written, current exit plan.

The survey was administered between October 2007 and February 2008 by Atlanta-based CMI, a full-service marketing research company that provides clients with strategic and tactical marketing insights. Significance testing is conducted at the 95% confidence level. At this confidence level, the data from 444 surveys has a precision level of +/-4.65%.

About White Horse Advisors

White Horse Advisors, LLC is an innovative, independently-owned business that provides fee-based financial and advisory services through Securian Financial Services Inc. to the owners of closely-held businesses and retirement plan sponsors. Our professionals work in teams and are committed to groundbreaking solutions, trusted financial advice and leading edge strategies through a process integrated with the clients tax, legal and other advisors. Objectivity, creativity and experience help promote financial peace of mind to our corporate and individual clients.

Contacts

For White Horse Advisors
Media contact:
Erica Stephens, 770-429-1958
erica@emstephens.com

Contacts

For White Horse Advisors
Media contact:
Erica Stephens, 770-429-1958
erica@emstephens.com