Featured in Ijamsville Stroll Magazine: Risk Management with Cameron Bell

Happy June to you! Hard to believe the year is almost 1/2 over. Seems like only yesterday we started on our series on improving your finances in a year.

So far, we have concentrated on individuals and families. Today let's talk about the backbone of the economy in America - privately held companies.

Privately held companies, according to recent pre-COVID data, represent approximately $30 million in sales. Additionally, about 60% of those owners are over 53. Many of those owners have spent most of their adult lives building their businesses; few have spent any time planning their transition from their business (selling).

What happens when owners don't plan for the day they leave the business? Circumstances take hold, (most commonly an illness) and the company goes into crisis mode. Planning, training, and sales growth stops. Weeks, months, go by. Rumors circulate. Key employees leave. And in many cases, an owner's life's work is liquidated for pennies on the dollar. Even the best-laid plans can go astray.

Previous surveys conducted by the Exit Planning Institute (EPI); Pricewaterhouse Coopers (PwC); the Alliance of Mergers and Acquisitions (AM&AA); Tom West, founder of Business Broker Press; and the Family Firm Institute (FFI) have determined that historical transition success rates range from only 20% to 30% nationally.

While it’s impossible to address this failure rate fully in this article, here are some questions to ask yourself to help determine your business’ attractiveness for transition:

Have you spent some time and money getting educated in the process of transitioning your business?
Are your personal, financial, and business goals aligned (defined, co-dependent, and linked)?
Have you created an advisory team including an attorney, CPA, wealth advisor, exit advisor, key employees, and key family members?
Have you created a contingency plan that outlines what happens to the business if something happens to you? Is it funded and communicated among key advisors?
Have you created a strategic analysis, including a business valuation, in the past 2 years?
Have you considered all your options and optimum deal structures? Have you written down the pros and cons of each one?

If you answered "Yes" to the above, you are ahead of the game!