If this recent market meltdown has taught us anything it is to make sure you are diversified over several investments and asset classes. Would your financial advisor recommend that you put 80% or more of your assets into a single investment? Of course not, but a large percentage of business owners actually have that level of concentration. On top of that, privately held businesses are illiquid assets often requiring one to two years to sell.

So for your baby boomer business owner, it is time to recognize the importance of planning for your business exit or business sale. It is time to move your thinking about your business from – the vehicle to provide income to your family, and start thinking about it in terms of wealth maximization.  Below is a graphical comparison between a business owner and another high net worth individual.




Business owners are typically not proactive when it comes to exit planning or succession planning in their business because it forces them to embrace their own mortality. If an owner has a sudden debilitating health issue or unexpectedly dies, instead of getting full value for the company, his estate can sell it out of bankruptcy two years later for ten cents on the dollar. This is a punishing financial result for the lack of appropriate planning.

There are many complex issues involved in a business transition or a business sale. Poor decisions at this critical time can result in swings of hundreds of thousands or even millions of dollars. If you can take away one thing from this, it would be to actively get out in front of the process with your professional advisors. This decision and how it is executed will be the single most impactful event in your family’s financial future.

As business owners approach retirement, they often seek help with investment decisions that employ sound diversification and liquidity strategies. Your business is generally the largest, most illiquid, and most risky investment in your total wealth portfolio. Your successful business exit should be executed with the same diligence, knowledge, experience and skill that you have regularly applied to the organizing, running and building your business.


Dave Kauppi is the editor of The Exit Strategist Newsletter and a Merger and Acquisition Advisor and President with MidMarket Capital, Inc. MMC is a private investment banking, merger & acquisition firm specializing in providing corporate finance and intermediary services to entrepreneurs and middle market corporate clients in information technology, software, high tech, and a variety of industries. Dave began his Merger and Acquisition practice after a twenty-year career within the information technology industry.  His varied background includes positions in hardware sales, IT Services (IBM’s Service Bureau Corp. and Comdisco Disaster Recovery), Software Sales, computer leasing, datacom, and Internet. The firm counsels clients in the areas of merger and acquisition and divestitures, achieving strategic value, deal structure and terms, competitive negotiations, and “smart equity” capital raises. Dave is a Certified Business Intermediary (CBI), is a registered financial services advisor representative and securities agent with a Series 63 license. Dave graduated with a degree in finance from the Wharton School of Business, University of Pennsylvania. For more information or a free consultation please contact Dave Kauppi at (630) 325-0123, email davekauppi@midmarkcap.com or visit our Web page http://www.midmarkcap.com




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