We are excited to release a new regional State of Owner Readiness Report for the first time since the Nebraska Report in 2019. We recently conducted research on business owners in the greater New York region to measure their readiness and attractiveness in terms of exiting their business.
The State of Owner Readiness Report is an analysis of data collected from business owners in the New York City area to determine their readiness to exit their business.
This year we asked business owners about their transition teams, business exit timelines, and the importance of a transition strategy. The data in the report highlights the importance of educating business owners about exit options. After reading the report, professional advisors should apply the results to their practice and utilize this valuable information about emerging client markets.
What happens if the business does not successfully transition? The alternative is a business shut down. People lose their jobs. Families suffer. Communities suffer. In addition, in many cases, the owner’s life work is liquidated for pennies on the dollar. Exit Planning provides owners with the knowledge they need to effectively transition their business to the next owner. The data collected in this year’s State of Owner Readiness Report provides a look into the mind of a business owner and allows professional advisors the opportunity to conduct comprehensive exit planning conversations.
The research shows different results than any State of Owner Readiness data we have collected! Exit Planning Institute President, Scott Snider, shares, “87.73% of the owners that took the survey are 49 years old or younger! The data is beginning to show us that these owners are ready for an exit conversation. What are you doing to engage your business? Do you have the right knowledge and process? Are you having the right conversations? Are you teamed with the right people?”
When asked when they plan to transition their company, 91.55% of business owners said they plan to transition in the next 10 years. 70.89% plan on transitioning the business in less than five years. Keep in mind that roughly 88 percent of these owners were under 50 years old and about 68% of them are second-generation and beyond family business owners. This means many of the owners in this survey plan to exit their second or third-generation family business in their 50s.
Baby boomer business owners, who only represent approximately 5% of the responses in this survey, have had the opposite approach. Baby boomers have the tendency to “hold on” to their business for as long as they can.
In our opinion, the data from this survey could be a true reflection of the generational differences between baby boomers, Generation X, and millennials. Baby boomers are the inventors of the 60-hour workweek and many define their core value of success through their business.
In every State of Owner Readiness survey, we ask business owners, “Who is your Most Trusted Advisor?” This year, for the first time in 11 State of Owner Readiness surveys, the majority of owners selected the Financial Advisor as their Most Trusted Advisor. In years past, financial advisors had never surpassed 10% of the responses in this category, whereas this year they made up 55% of the total responses.
Over the last several years, the financial industry has made significant investments in exit planning, value acceleration, and changing the way they work – specifically with business owners. Results from this survey show how financial advisors are working with business owners and the corresponding investments are paying off.
Request the New York City State of Owner Readiness Report today to gain valuable insights into the mind of your potential business owner clients. The results of this New York City study produced remarkable improvement in business owner planning for business and personal transition.
Request the ReportWe would like to thank our sponsors: McCarter & English and PKF O’Connor Davies Accountants and Advisors.