By Mark Bertoli, IPC Securities Corporation
Special to the Financial Independence Hub
It has been estimated that over the next decade there will be approximately $1 trillion in personal wealth transferred from one generation to the next. A great portion of that wealth is currently tied up in equity within Canadian small businesses. A recent study conducted by IPC Private Wealth, a division of Investment Planning Counsel (IPC) revealed some startling statistics.
A full 42% of business owners are uncertain about their retirement and what is more alarming is that almost half of business owners (48%) do not plan to seek the advice of an advisor. Some of the existing plans of business owners consist of working until they are unable to do so (36%) or exiting when they have enough money (25%). One highlight is that 29% of business owners plan to run their business until their successor is ready.
How to maximize the value of a business
Start with a plan: it is a great strategy to start early. A 10-year plan is a good starting point. Seeking a financial advisor with experience in business transition is a great advantage. This may be the owner’s first business sale but the advisor may have navigated these waters many times and has the advantage of knowledge. The advisor may bring in specific expertise to increase the value of the business. If an advisor – who truly acts as a coach – is brought into the situation, one of the first projects would be to systemize the operation and create a turnkey situation. The business is then far less reliant on the owner and more valuable to a potential buyer or successor. With time on your side, many other strategies may be employed.
A family business or a liquidity event
When selling or transitioning a business, there are several steps that are critical to its future success, as well as the social continuity of the seller, buyer, or heir. Continue Reading…