Legacy Advisors Arizona, LLC

Timing plays a critical role in the creation of wealth and the monetization of assets at maximum value. And, for Business Owners the Time is Now to Plan.  Prepared or not, Business Owners will feel the impact of the dramatic demographic shift occurring in America.  This change in our populations’ profile has major implications on the market value of privately-held companies in America.

The Media has done a pretty good job informing the general public about the “Aging of America”.  The Baby Boomers (born from 1946 to 1964) are “aging out”, moving toward retirement.  Yes, employers have an issue.  However, the media has not brought to light that the Baby Boomers are the most prolific creators of privately held companies in our country’s history.

With over 20,000,000 privately held companies operated by Baby Boomers, all of whom are looking to exit their business over the next 10 years, the supply of businesses looking for a successor will exceed the demand.  When supply exceeds demand, value and prices fall.

Supply exceeding demand?  A huge number of businesses will be looking for a successor to operate and perhaps, eventually own the business.  The next two generations born after the Baby Boomers are Generation X and Y.  Both Generation X and Y have similar values as the Baby Boomers.  However, these two generations together are much smaller than the Baby Boomer Generation.   After Gen X & Y is the Millennial Generation, a generation larger than the Baby Boomers with strikingly different values.

Today, studies indicate that the Millennial Generation have a value set based more on lifestyle, limited risk and fewer long-term commitments. While this may change with time and there are some outliers (those whose profiles fall outside the norm), this is the generation that will replace retiring Baby Boomers.

Given this inevitable marketplace, Business Owners need to plan now to develop and execute a strategy for better outcomes upon exiting the business.  Planning today will allow Business Owners to have options such as: time the market to convert the Business into cash to fund their retirement at maximum value through a sale; or, develop a leadership/management team capable to operating the Business for continued cash flow through retirement.

Can it be done? Absolutely, it can be done and done well.  However, we have found that most business owners have not taken the appropriate steps to plan or have taken unguided missteps.  And, they are leaving millions of dollars on the table.  To spend 20 or 30 years building the business, not plan an exit and have retirement fall short of one’s dream is tragic.

In most cases, when we think about our assets, we have an understanding of its value based on a stock or 401K portfolio report or from a recent real estate sales report.  We engage financial and real estate professionals to guide us on when is the best time to take profits (sell positions); take losses (stop losing position); and reposition (re-balance portfolio given your changing requirements).  All of these activities with professional guidance further our overall financial and wealth goals.

Yet, the Business – often the largest asset on a personal financial statement, is left unchecked as to its value, position in the market (increasing or decreasing value relative to other similar like businesses), and market timing to monetize at the maximum value or at a certain age of the owner.

Knowing that more than 75% of Business Owners are relying on the monetization of their business to fund their retirement, it is imperative to understand its value, what adds and detracts value and market timing. Yet, less than 15% have taken steps to plan how and when that monetization event will occur.

By virtue of being a Business Owner, you have always taken the path less traveled.  You have always determined your future.  We encourage you today to stand out from the crowd.  Inquire on the Planning for your eventual succession and graceful exit.