Case Study: "Fear of the Unknown"

Facts on Exit Planning

Almost 50% have no plan to transfer ownership, management and control, and the percentage is even higher for companies that have been in business for less than 20 years
Nearly 60% of closely held companies have failed to gauge the potential tax exposure upon a transfer of ownership
25% are due to change hands within the next 5 years
About 90% of owners of closely held companies would like to transfer ownership, management and control of their companies to family or non-family key employees. Less than 50% manage to do so
Only 33% have defined criteria for hiring and promoting family members who want to take an active role in the business
Over 33% of closely held companies have no procedures in place for dealing with disputes between family member owners

^{1The statistics provided above have been derived from a variety of surveys of closely held business owners including: the PricewaterhouseCoopers 2007-2008 survey of nearly 1,500 closely held companies; the 2007 survey of 800 closely held businesses by the University of Connecticut School of Business Administration Survey; and the 2003 Arthur Andersen/Mass Mutual American Family Business Survey.}

Exit News

Situation and Objectives:
	John is 61 years old, the President and majority shareholder of regional plumbing and heating company with $55 million in sales. He receives weekly unsolicited calls from business brokers and investment bankers with offers to buy or sell the company. He knows that he needs to plan for his eventual exit from the business and the calls are a constant reminder that he hasn't done anything yet. John is concerned that the callers' best interests may not be his.

Solution:

Company owners, directors and key employees now think like a buyer...
With a clear understanding of the company's value and the key drivers of the valuation, John and the other shareholders and Board of Directors concluded that although today was not the right time to take the company to market, it would be ready to go to market in the next 12-24 months.
Restructuring the company saved significant taxes upon sale and facilitated a less complicated sale transaction.
A "Stay Bonus Plan" was implemented to entice the company's key employees to stay through closing and add employment restrictions to prevent value dilution from a buyer's perspective.
John was now armed with the tools to choose the right investment banker to sell the company on his schedule and on his terms.

Facts on Exit Planning

Exit News

Situation and Objectives:

Solution: