Selling or Succession Planning: Preparing Senior Living Operators for the Next Generation
#ALFA2014
Before we begin… • Estate planning ≠ succession planning • Retirement ≠ sale of the business • Ownership ≠ management Succession planning is about creating options and flexibility for business transition that align with your goals and dreams. #ALFA2014
Why are we talking about succession?
Some Expert Estimations About Baby Boomers Around $11 trillion will be transferred from one generation to the next.1
9 million of America’s 15 million business owners were born in or before 1964.2
Most business owners will wait until the 11th hour to do a succession plan or determine the value of their business.
75%
75 percent of business owners don’t have exit plans.3 #ALFA2014
The Typical Business Owner‌ Many business owners have up to 80% of their net worth tied up in their business 65% don’t know the value of their business 96% of boomer business owners agree that having an exit strategy is important
BUT Majority do not have a written plan #ALFA2014
The Demographics Don’t Lie… Number of small business sales in Jan-March 2013 increased 56% over Jan-March 2012 • 40% of privately held businesses are expected to change hands over the next 5 years • An estimated 20% of business owners are contemplating a succession event RIGHT NOW Sources: http://www.amazon.com/The-Trillion-Opportunity-Successful-Strategies/dp/0977602303 http://www.cnbc.com/id/100748998 http://www.sbwire.com/press-releases/american-fortune-sees-a-baby-boomer-business-sell-off-on-the-horizon-289071.htm
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Consideration: Be a Net Buyer Net Buyer
Net Seller
Net buyers have SIGNIFICANT opportunity to multiply wealth/mission
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Why is Succession Planning so Difficult? Uncomfortable to think about life after retirement Feels like a waste of time when there is something more pressing Overwhelmingly complex – not in the individual’s area of expertise Feels like owner/executive is choosing a “final answer” #ALFA2014
Why is Succession Planning is so Necessary Uncomfortable to think about life after retirement
Incredibly uncomfortable and expensive for your family to handle your business matters if an unforeseen event occurs
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Why is Succession Planning is so Necessary Feels like a waste of time when there is something more pressing
Planning activities to preserve your legacy are as important as planning activities were when you formulated your business plan
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Why is Succession Planning is so Necessary Overwhelmingly complex – not in the individual’s area of expertise
It is complex. All the more reason to face it head on and bring the right people to the table
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Why is Succession Planning is so Necessary Feels like owner/executive is choosing a “final answer�
Planning early allows for more options and decision making on your terms
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Succession by Design – Let’s keep it simple
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Our dreams are as unique as each of us • Business • Family • Community • Health • Faith If you don’t know where you’re going, you might wind up someplace else. Yogi Berra
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Succession by Design – Let’s keep it simple
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Building a healthy, sustainable business Expanding your options using the value triangle
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The Value Triangle
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It is more than just about numbers
Relationships with referral sources Resident satisfaction
Workforce availability Regulatory environment Market saturation Community reputation
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Succession by Design – Let’s keep it simple
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A personalized plan is an integrated plan that provides options.
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Succession by Design – Let’s keep it simple
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Be a Boy Scout…Be Prepared • Leadership • Governance • Business • Estate • Family relationships • Legal • Accounting #ALFA2014
Next Generation vs. Current Owner Differing Perspectives
Gen X / Y Excitement Wealth accumulation Energy at peak Accustomed to security ‘He’s stuck’
Baby boomer Stages of loss Wealth preservation Energy waning Accustomed to being ‘at risk’ ‘He’s reckless’ #ALFA2014
Next Generation vs. Current Owner Differing Perspectives
KEY:
Balancing perspectives
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Succession by Design – Let’s keep it simple
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Our dreams don’t end at the transition.
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Asset/Liability Planning
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One Final Thought
Plan ahead to get the results YOU want
$$$ #ALFA2014
Cory Rutledge, CPA Principal CliftonLarsonAllen LLP Cory.Rutledge@CLAconnect.com #ALFA2014