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Clock Running Out on Baby Boomer Transition Planning

Procrastination has finally caught up to the generation of Baby Boom business owners!

Almost 2/3 of this country’s privately owned businesses are still owned by Baby Boomers according to recent studies by the Exit Planning Institute (EPI). The youngest of these owners are now around age 55.  After living through the crash, 9-11, the great recession of 2008-2009, they are faced with an even greater economic challenge as a result of the virus pandemic. The value of every owner’s business is feeling an impact to some degree.

The EPI State of Owner Readiness Survey for Nebraska last year indicated that 95% of all business owners thought it was important to have a transition strategy for their business. But, only about one third of all business owners have paid any attention to planning for their eventual transition out of the business.

Most main street acquisitions rely on financial results over the previous five years for valuation. Until the pandemic, those years have generally been good. How long it will take for business profitability to return to normal from this financial disruption is anyone’s guess now. Some industries will suffer “lost demand” like restaurants and airline hospitality (airlines, rental cars, caterers, party buses) while others will suffer delayed demand such as autos and clothing. Overall, the macro changes revolve largely around consumer demand & supply chain challenges. And how long it takes to remove limitations on doing business.

Key Point

Can I hang on long enough to bring my business value to a level I need in order to retire? Will my health permit me enough time to recover? In addition, it generally takes 3-5 years to plan for an eventual transition. Assume you wait 5 years to start planning your transition, you may be in your mid-60’s or early 70’s before you complete a transition. And if the deal is not all cash, you may wait years more until you receive all your money.

Procrastination will not work anymore for Baby Boomers! It is time to take control of our transition plan because if you don’t, someone else will and you may not like the outcome.


1.   Assess Cash Flow – Business value is a function of the expected future net cash flows accruing to the ownership. The business owner who increases profit/cash flow (through higher revenue or lower expenses) and/or reduces the risk of future cash flows (through sound business decisions) will increase business value.

2.   Contingency Planning – Prepare a formal crisis contingency/business continuity plan. This will provide instructions to those you leave behind if you are suddenly incapacitated or die.

3.   Meet with Trusted Advisors – Schedule meetings that include all of your trusted advisors at one time at one place so everyone can get on the same page. Property Insurance Agent, Financial Planner and Business Lawyer and Accountant.

4.   Retain a Business Coach – It is critical that you receive advice on leading through crisis situations. (i.e. Financial Assessment and planning, operational health, cash flow management and human resources to make sure everyone is working together in the same direction.)


1.   Do I know how much I need to retire, with a professional analysis of my living expenses, life expectancy and inflation assumptions.

2.   Do I know how much my company is really worth, and who is most likely to pay me that amount?

3.   If #2 doesn’t meet the needs of #1, do I know how long, and what it would take, to get my business there?

4.   Do I know all the options for monetizing my business, including a sale to employees, another entrepreneur or professional acquirers?

Take Action Now

If you are a Baby Boomer, unless you start right now you risk a discussion in 2025, or 2028, or 2031 that starts with, “Well, the coronavirus hit our industry pretty hard, you know.”


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