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Business Owners: Don’t Make This Costly Retirement Mistake

By Generational Equity

Retirement Paperwork

Many business owners have the vast majority of their net worth tied up in the business, according to a study by the U.S. Small Business Administration. Whether they are able to retire comfortably after a lifetime of hard work will depend on how carefully they create (and follow) their exit strategy. Those who plan to retire soon, or even years from now, need to take specific steps to assure they receive the maximum value for the enterprise they have created. Failing to do so can be a costly mistake.

According to the Pew Research Center, more than 3.5 million baby boomers will turn 65 this year. While the study also shows that boomers don’t believe old age begins before 72, the aging boomer population is leading to a dramatic increase in the number of business owners seeking buyers for their companies. Now may be the best time to sell given the exponential growth in baby boomer business owner retirement over the next 15 years.

“Selling a business for an optimal value begins with a process that many business owners have been too busy to think about,” said Carl Doerksen, of Generational Equity, a firm that specializes in the valuation and marketing of companies valued at between $1 and $150 million. “Those who must suddenly sell due to health issues or other events will often fail to recognize the full value of the enterprise they have created.”

Generational Equity offers executive conferences for business owners that illustrate the multi-step process necessary to maximize a company’s sales potential and price.

Getting the books in order is step one. This includes recasting earnings to reflect the true financials of the business without one-time expenses or costs and other items not relating to the ongoing operation of the company. For example, a new owner won’t be paying the lease on the former owner’s company car, his or her country club dues or hire non-essential relatives or friends. Recasting earnings can add thousands of dollars to the businesses valuation.

“Professional M&A advisors can also help identify intangible assets that don’t appear on the books but will draw the interest of potential buyers. The length of service and quality of your employees as well as long-term relationships with major customers have real value that buyers may pay for,” says Doerksen. “Why sell to an acquirer who is unwilling to pay a premium for your business?”

Generational Equity often identifies multiple potential buyers for a business. “Equity firms with portfolio companies that have synergies with your business may find your company attractive,” says Doerksen. “Foreign companies that have or desire an expanded U.S. presence in your industry may be attracted as well. Even retired CEOs with a high net worth who are interested in staying active are potential candidates.

“So the goal is not just to identify a single potential buyer,” says Doerksen, “but rather create an auction among several potential buyers and if interest rates continue to rise, identify buyers for whom this is less of an impact.”

If you have questions or are interested in learning more, contact Generational Equity at 1-972-232-1121 or send an email here.

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We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.
Michael J Polarek, President, Paragon Packaging
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!
Andy Graham, Vice President, Modern Heating & Plumbing
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.
Michael J Polarek, President, Paragon Packaging
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”
Karen S. Williams, CFO, BW Manufacturing
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.
Karen S. Williams, CFO, BW Manufacturing