Baby Boomers are transitioning to retirement and selling their businesses in numbers never before seen in the United States. Presently, 40% of baby boomer business owners are looking to sell within the next 5 years according to a survey conducted by the EPI. This has provided a spark to the business broker industry as well as a large number of new entrants in the SBA lending space, a large provider of capital to buyers in business acquisition.
Thanks to organizations like the Exit Planning Institute (“EPI”), we have data on the challenges business owners face. These challenges include:
- 60% do not understand their exit options
- 30% have no transition plan in place
- 79% have no written transition plan
- 49% have done no planning at all
- 80% do not have a formal advisory team
- 94% have no written plan for their next chapter (i.e. retirement)
These statistics are alarming. Furthermore, 80% of an owner’s wealth is locked in the business, 50% of business transitions in the U.S. are involuntary (death, illness), and 75% of owners regret selling after one year according to a PWC survey.
There is a tremendous need for trusted advisors to prepare and coach business owners through the process. Trusted advisors may include a spouse, CPA, financial planner, attorney, or a business broker. However, we have found that these specialties often operate in silos, or, have financial conflicts of interest.
That’s where the Value Growth Advisor comes in. At AMP, we are rooted in business valuation and consulting, having completed hundreds of business appraisals for companies and industries all over the country. Our team has obtained our Certified Exit Planning Advisor credentials, demonstrating our commitment to staying up-to-date with the latest trends and expertise across the exit planning field. This expertise enables us to serve as value advisors, working with business owners to grow the value of their business according to their desired timeframe.
What is a Value Growth engagement?
As value growth advisors, we are focused on the whole entrepreneur. This includes the business, but also personal and financial goals.
Within the business, we complete a baseline business valuation to determine where the value is today and identify areas to improve. We then complete a personal and financial readiness assessment and ask tough questions about goals for life within or after the business. A value growth engagement doesn’t require an exit. It’s simply good business strategy, and a value growth engagement will ultimately prepare owners for a quicker, premium exit option when the owner is ready.
The engagement comprises a workshop every 90 days where the AMP team will meet with the business owner and key stakeholders to discuss topics centered around the business and personal goals. We will prepare a customized action plan and chart steps to take every 90 days to move towards best-in-class business and personal preparation. Early strategies are focused on reducing risk in the business, a term we call “value capture.” Then, we move towards adding efficiencies and growing the business, “value growth.” These strategies are bespoke to every business, owner, and timeframe. We rely on our background as experienced appraisers, consultants, business operators, and teachers to connect with our clients and earn their confidence.
Find the EPI’s State of Owner Readiness Colorado report here for more data and owner insights.
Interested in learning more? Contact Mark Ahern at mark@ampbusinessconsulting.com.