Released on: September 9, 2008, 1:25 pm

Press Release Author: Katherine Bowers

Industry: Small Business

Press Release Summary: It is estimated that Baby Boomers are expected to transfer
over $10 trillion in wealth, much of it held in privately-owned businesses. Yet
with retirement quickly approaching, a recent study finds that the vast majority of
business owners have not started planning for the biggest wealth transfer in
history, mainly due to confusion about how to start the exit process.

Press Release Body: Despite confusion about exit strategies, 47 percent of
middle-market business owners 55 years and older are interested in selling their
businesses within three years, and yet over 90 percent of business owners have not
initiated the planning process, according to a survey released today by leading
middle market advisory firm Orion Capital Group. 71 percent of those surveyed
indicated they would sell their business to a third party, but only 9 percent
indicated they wanted to transfer their business to family members.

“It is striking that a vast majority of owners prefer to sell to third parties, but
only one in ten have initiated the planning process,” said Neil Shroff, managing
director for Orion Capital Group. “Owners of privately-held businesses have many
options, whether they want family members or employees to continue the business, or
whether they prefer a sale. However, by waiting until the last minute to make a
decision, many business owners unintentionally eliminate some of their best
opportunities.” The survey revealed that a lack of knowledge about available
resources accounted for 39 percent of those without exit plans, and a lack of time
accounted for another 27 percent. Shroff said “Many buyers prefer that the owner
continue to work anywhere from one to five years after the sale to smoothen the
transition. If an owner waits to sell until he no longer wants to be involved with
the business, the buyer will usually reduce the price to account for the riskier
transition. Early planning alleviates this risk.”

The Orion Capital Group survey underscores the importance of synchronizing the
efforts of CPAs, attorneys, and financial advisors well in advance of an exit.
However, an astounding 77 percent of business owners were unaware that
exit-planning professionals exist. “Your financial planner holds a piece to the
puzzle, as do your attorneys, CPA’s and tax specialists. Exit planners and
intermediaries fit the pieces into the context of a comprehensive plan that they
help manage and execute,” Shroff remarked. “Start a dialogue with an intermediary.
An early dialogue is not a commitment to sell, but it’s very important for
business owners to understand what they can and should do while they are still able
to implement those strategies.”

While many business owners are eager to sell, Shroff said the survey revealed that
taxes and legal fees were major concerns of owners contemplating all types of exits.
Over 23 percent said that the amount of tax and legal fees involved in the sales
process was the most important factor in deciding to sell. “Again, careful planning
is important. The transactions where legal fees and taxes are typically highest is
when the planning begins immediately before the exit, and at that point it is simply
too late to engage in effective tax planning,” Shroff explained. “With an election
approaching, and many tax cuts set to expire, it is especially important for
business owners to educate themselves about their options.”

Business owners who are waiting to sell cited many reasons, with 19 percent citing
market conditions, and 24 percent indicating they were waiting to build profits.
“Timing can be everything,” Shroff commented. “We’re seeing increased interest from
strategic buyers who were previously priced out by private equity groups that relied
heavily on credit. Good deals are continuing to get done, and the deal volume in
many industries is increasing. The important point is that business owners should
have a plan so that they can act quickly when an opportunity arises.”

Bain Surveying, Inc conducted the survey, which polled over 350 business owners
across the United States aged 55 and over. Businesses polled had annual sales
between $5 and $76 million. An interactive version of the survey is available at
www.orioncg.com where business owners can compare their results to those surveyed.


Web Site: http://www.orioncg.com

Contact Details: Orion Capital Group
Katherine Bowers, Director of PR