Over on one of the LinkedIn Groups I’m part of, there is a debate going on about who should lead the charge to help business owners with their exits.
Should it be the:
- Certified Exit Planner?
- The Family Business Specialist?
- The Business Broker or M&A advisor?
- Consultant who help companies grow?
- How about the accountant, lawyer or insurance advisors?
- We can’t forget the wealth manager or financial planner?
It seems there is a bit of a tug of war over who should be the anointed experts to help a business owner finish the race with a big cheque in her/his hand.
I’ve got news for anyone who advises business owners:
- You are all needed. An owner can’t get to the finish line on her/his own. They need all these listed advisors.
- A recent survey by a large investment bank and validated by business brokers is showing that 90% of business owners fail to find buyers. Doubt that statistic? Read the next bullet
- After PWC polled 2.8 million business owners in 2007 about their exit plans, 70% said they would sell by 2012. 1.96 million business owners decided to claim their wealth. So did they succeed? Our research with CapitalIQ is showing that by 2012, 199,474 companies under $500 million in value had succeeded in selling their companies.
- What happens to an owner the day after they’ve had their last buyer rejection after months of distraction with due diligence? They have to walk back into their business and find the energy to keep going and re-build.
The reason for their dismal success rate?
Business owners don’t know what they don’t know.
- They assume they can claim their wealth by selling when they want for what they want… since no has told them their chances are as slim as the talented 18 year old hockey star’s chance of getting an NHL contract. (Hey, I live in Canada)
- They don’t know that their offspring and their employees should not be their first ideal buyer choice.
- They don’t know that their companies are unsaleable even though they are successful for the owner. “Hey, look at my lifestyle… what do you mean, this is a great business!” Learn about becoming saleable here.
- They believe what the succession literature tells them… deal with your tax and estate, find a replacement for you and you too will get that big fat check when you sell. It’s inevitable. Like kids, thinking they are invincible.
- They are both seduced by and turned off by all the calls and invitations from deal makers promising to ‘package up their deal’ in exchange for a five figure retainer… as if that’s all that has to be done to make a business saleable. I hear the Pied Piper.
- In lieu of any contrary information, education or wake up call, most business owners have no idea they would have to transform their “Lifestyle” business into a “Wealth Generating” business to make it saleable and of interest to external buyers (and the banker lending the internal buyer the money to do the buy out).
So who owns this problem? The problem that business owners don’t know what they don’t know?
In my view, it’s every advisor who has the ear of owners. It’s our problem to solve, people.
I want to thank all the advisors who have been writing up a storm on our LinkedIn threads, writing to me personally and Tweeting our posts, for adding depth to this very real problem that affects all of us.
So where to start? With the wake up call conversation. Not sure what you should say?
In the lifecycle of a business owner there comes a time when some external event or person taps them on the shoulder (that’s you!!) and should be saying:
“Hey, you need to envision a different future for yourself if you want your company to continue to thrive and if you want to extract the wealth you have built up in your company. The problem is, you can’t wait for the moment that you feel ready. You have to take responsibility now, long before your exit date so you have the energy, desire, passion and stamina to make your company saleable. That’s the work that has to be done to make it attractive to its next owner, before succession planning, before exit planning. And before you make it saleable, you have to decide that this is the future you do want. The alternative future is that you close one day, give pink slips to employees and hope that the money you put aside all these years is enough to keep you in the lifestyle you’ve grown accustomed to.”
“So… What is your decision? Which future do you want? Lifestyle or Wealth Generating”
This conversation has to happen before any of the advisors who care about their clients out there get to do their work. No conversation with the business owner like this, no action taken and that default future… slow wind down until closing will happen.
I want to know from all of you: Who is willing to have that conversation with the business owners in their lives, be it friend, or client?
Whether you are a wealth manager, a lawyer, an accountant, an association, an industry group, a consultant… Unless we unite and start the topic, we will all be affected… 50% of every company in North America is owned by a boomer. 90% are failing to sell after three years of trying. You do the math on the affect this will have on our economy.
When we all speak up and give the owners in our lives this wake up call, we all get to do our part to help those owners get the sale of their dreams.
Collaboration is essential. That’s my message.
Will you join me?
With 2.8 million business owners in North America greying round the edges, there’s more than enough opportunity for everyone.
Tell me what you’re going to do to spread this message.
Here’s what I’m doing. I’ll invite any of you advisors to speak at one of our webinars for business owners about how to make the decision (Lifestyle or Wealth Generating future) and how to become Saleable. We market to our list. You market to your list. Let’s keep the conversation and the action going. Want in? Leave a comment below – it’s your public declaration, and then contact us to set up a time to talk with us.
Get more help to get the conversation going with your business owner clients: Lawyers, Wealth Managers and Accountants, this tool is for your benefit – Send them this link to take the “Is Your Business Saleable?” Quiz.