Only 30% of Family Succession Plans Work Out

By Matt Silasiri – Marketing and Business Development Manager

One of the more staggering statistics from the 2023 Minnesota Owner Readiness Report was the following:

39% OF ALL BUSINESS OWNERS ARE NOT FAMILIAR WITH ALL OF THEIR TRANISITION OPTIONS.

Let’s take a look at a basic breakdown from the report:

Are You Familiar with All of Your Transition Options?

Most business owners have a variety of exit options, and it’s vital to be familiar with secondary (backup) options if primary options don’t come to fruition.

According to the survey, the top three exit options were:

1. Internally – Transfer of ownership within the family

2. Externally – Third-party strategic, private equity, or non-family individual

3. Employee stock ownership plan

There are 7 ways that business owners generally exit their businesses, and the report provides us with a deep dive into how Minnesota business owners intend to transition.

How Minnesota Business Owners are Planning to Transition

“Statistics collected by the Family Firm Institute find that only 30% of companies are successfully transferred into the second generation and only 12% into the third generation. Given the heavy focus on family transition, the family should approach the transition of their company with the same vigor as they would if they were planning to sell it to a third party.” – 2023 EPI State of Owner Readiness Report

Recommended Action Steps:

1.

Continue to immerse yourself in education

2.

Identify both primary and secondary exit options

3.

Concentrate on both value and income generation

4.

Establish a team of advisors

5.

Understand the value of your company

Let’s Start a Conversation

Stay tuned for more details and analysis from the 2023 Minnesota State of Owner Readiness Report.

Questions about the exit process, or valuation?

Call us today (612) 235-3511.

About Sunbelt Business Advisors of Minnesota

The Sunbelt Business Advisors Minneapolis office is the largest office in the Sunbelt network with a staff of over 50 advisors, associates, analysts, and business development representatives. In 2021 the firm was recognized by the International Business Brokers Association as the #1 firm in the country and the first firm in history to sweep all three first-in class awards. Sunbelt provides services to business owners interested in selling their businesses, assistance with merger and acquisition activities, complimentary business value assessments, and advice to business owners seeking to maximize their life’s work when they exit. The firm provides business brokerage and mergers & acquisitions services for companies with revenues from $500,000 to $150 million. More information is available at www.sunbeltmidwest.com (<Under $5 million revenue) and www.tnma.com ($5 – $150 million in revenue).