A Decade of Development: 10 Findings in 10 Years of SOOR

During our annual State of the Institute Address two weeks ago, Scott Snider, President of Exit Planning Institute, unveiled the results of the organization’s National State of Owner Readiness™ Report (SOOR)—the first national study since 2013 to measure owner readiness and business attractiveness.

As a reminder, the first National SOOR in 2013 had two key findings:

  1. There was a lack of planning and overall communication on exit strategy.
  2. Business owners hadn’t yet considered personal planning for their life after exit.

Since 2013, EPI has been laser-focused on improving education and communication on exit planning to help small business owners throughout the U.S. prepare themselves and their companies to transition to the next step. Over the past decade, EPI has conducted 14 regional surveys in locations like Minnesota, Los Angeles, Colorado, New York City, Nebraska, Wisconsin, Georgia, North Texas, Long Island, Nashville and San Diego. These regional surveys—and the results of the 2023 SOOR—show that exit planning is now not only a highly valued profession, but also that business owners have made significant strides in building personal exit planning teams, crafting and operationalizing written exit plans, and harvesting more value from their businesses upon exit.

1. 73% of business owners would like to exit their business within the next 10 years.

It may be tempting to think that this statistic is reflective of older Generation X and Baby Boomer owners nearing retirement. However, only 19% of our respondents were Baby Boomers and only 39% were from Generation X—accounting for 58% in total. Generational differences—such as younger Generation X owners’ and Millennial owners’ preference to “build and exit” (and repeat with another business)—are a reality that’s impacting business ownership. 

2. Younger owners—Millennials and those in Generation X—view exit strategy as a priority.

Since younger owners plan to build and exit from several companies in their lifetime, it’s good to see that these owners are actively planning for their exit. 56% of Millennial owners reported they have written personal plans, 55% have written company plans and 68% had written personal financial plans.

3. Owners are more aware of their exit options than they were before.

Due to a growing body of education on exit planning, 70% of owners said they were aware of all of their exit options in 2023, up from 34% in 2013.

4. Financial advisors are now a business owner’s most trusted advisor.

In 2013, accountants were business owners’ most trusted advisor, followed by peers, spouses, lawyers and then financial advisors. In 2023, there was a significant shift: owners now trust financial advisors first, then lawyers, accountants, spouses and bankers. The financial services industry has focused tremendous effort and investment into engaging business owners seeking to build value and align their personal and financial goals.

5. Owners are putting pen to paper, with a 289% increase in written transition plans.

We advocate for transition plans to follow Three Legs of the Stool™, a framework for exit strategy developed by Christopher Snider, CEPA, CEO of the Exit Planning Institute. By aligning the three legs—personal, financial and business—owners can develop plans that harvest value from the owner’s company. In 2023, 49% of owners said they had written personal goals and objectives, 68% believed they were above average in their financial strategy, and 44% say they have written business goals and objectives. While this increase over 2013 is heartening, there is more work to be done.

6. More advisors are available to help.

In 2013, there were only 180 Certified Exit Planning Advisors across the country. In 2023, there are over 5,000. Additionally, EPI has established a robust chapter network, EPI Academy, an online education platform, the Exit Planning Summit, a renowned conference. 

7. Investment in education is a critical path to success.

Once you learn about exit planning, you find it indispensable. Through EPI’s education efforts, more people know about exit planning than ever before—and are putting the tools to use. In 2023, 85% of owners who believed themselves to be best-in-class or better in exit planning had sought education, and 84% received outside guidance and counsel.

8. Second-generation owners are favoring internal—and family-oriented—transition plans.

84% of business owners surveyed have some form of family control in their business. 82% of second-generation owners favored an internal exit option, compared to only 60% of first-generation business owners. This preference for internal transition requires good communication. Nearly 90% of both first and second-generation owners reported that their families are aware of their transition plans.

9. A common framework for exit planning is needed.

The exit advisory community is growing, and it’s an evolving cross-functional profession that includes advisors from multiple disciplines and with varying expertise. The 2023 SOOR shows a wide range of preparation and preference for advisors in multiple fields. That’s why the community and market overall need to adopt a common framework, allowing for a shared language, process, format, concepts and goals. The EPI framework is called the Value Acceleration Methodology™, a proven process addressed in Walking to Destiny: 11 Actions and Owner Must Take to Rapidly Grow Value and Unlock Wealth by Exit Planning Institute CEO, Christopher Snider, CEPA. 

10. Exit planning in the next 10 years is a $14 trillion opportunity.

73% of privately held companies in the U.S. plan to transition within the next 10 years. In 2013, the National State of Owner Readiness Survey predicted a $10 trillion transfer of wealth via exit. In 2023, that opportunity is now valued at $14 trillion. What’s more: 48% of these owners want to exit within 5 years, meaning the next five years could see $9 trillion of the $14 trillion of estimated wealth transfer. Good planning with trusted advisors—under a shared framework—is essential.

Download the State of Owner Readiness Report

As we celebrate the 10-year anniversary of the groundbreaking research study, the State of Owner Readiness Report how do today's owners stack up against a decade ago? Delve into the latest insights, assessing business attractiveness and owner readiness on a national scale. Explore how readiness, paired with business attractiveness, significantly amplifies transition success. Uncover crucial findings indicating that prepared owners not only achieve SUCCESSFUL exits but SIGNIFICANT ones.