Almost two-thirds of privately-held or family-owned business owners fail to formally plan their exit strategy. The results further reinforce the owners’ failure to plan. Despite a ‘successful’ transaction, the values and the legacy of the original owner often fade. Only 58% of first-generation transfers survive; a remaining 30% of second-generation transfers survive. By third-generation, only a mere 12% of businesses survive.
Whether the ultimate exit strategy is a strategic acquisition, a buy-out, or a transfer of ownership to other partners/key employees, or an intra-family transfer, the business owner faces unique challenges beyond crunching numbers on the balance sheet. The decision to exit is not just a business decision, but one that has emotional and family dimensions, that may inhibit making good choices and one that often has conflicting consequences.
With the challenging economic and financial times of 2008 and 2009 behind us, there is pent-up buyer demand for M & A activity in 2011. Private equity firms have a reported $500 billion in uninvested and committed funds ready to be put to work. Strategic buyers have an estimated $1.8 Trillion is cash on their balance sheets and are looking to acquisitions to open up new market segments or strengthen their existing market position.