Over 415,000 Australians expect to retire this year. Interestingly enough, this number does not represent all eligible retirees. In 2006 – 8% of people over 65 remained actively employed, in 2016 it had increased to 13%; the ABS say that by 2020 the number will be above 21%.
That “actively employed” figure contains Australia’s largest group of self-employed business owners and entrepreneurs. These people should be entering the “business exit to retirement” period but they are not. Interestingly enough, these baby-boomers – knowledgeable and astute business owners – have seemingly forgotten the job they set themselves to do last – exit with money!
We no longer think business-owners are simply ignoring that the time has now arrived to think about exit strategy. Rather, they do think of it… a lot. In our recent interviews we have learned the top 4 reasons that explain why reluctance to engage with the exist process:
• Our Identity is wrapped up in the business – it is who we are and what we do
• We are not as wealthy as we thought we would be
• We have no future mapped out after exit
• We don’t understand or trust the process
It is an unfortunate fact that greater than 50% of the business owners who contact Negotia to talk about exits, are doing so only after the freedom to exit at their own discretion and time-frame has been taken from their personal control. Family, business-slowdown, personal health problems, even death is beating many people to the punch.
Since we commenced Negotia in 2014, we have advised many owners on exiting. We have counselled wives whose husbands died at their desk; we have spoken to owners who have survived break-ups and heart-attacks; debilitating cancers, accidents, banks and industry collapse; – and after these events – people can do very little as their business withers and dies in front of them.
Selling a company is simply another business process. It evolves, just like product development, financing plans or customers walking through your door. The complexities and uncertainties emerge by seeking counsel from well-meaning but unskilled friends, engaging inexperienced colleagues and advisors to guide you; or selecting real-estate agents masquerading as business brokers to represent you.
On the flipside, if you are looking for industry understanding to help you harvest value; Professional Brokers have been building their systems and processes for just this purpose.
That knowledge, currency of experience and skills to get exactly these outcomes you need, is available.
The following issues emerged early 2017, and they are now very real. I am sure they will have even more impact on the exit process as we enter 2019.
Before engaging any representative – even the companies that have been in this industry for a while, ask how that person is confronting these topics right now. Because if their firm has no embedded responses – they have probably not yet worked out the solutions to these industry-wide problems and they cannot successfully help you.
Investment money is scarce
Since early 2017 investment finance has become harder to obtain; consequently, investment has become riskier and prices of small to medium businesses have dropped – in some segments by more than 30% – and the average broker has not yet twigged and can’t tell you the phone may simply not be ringing because you are outside the market looking in.