Exploring Exit Planning Trends from the 2022 Business Owner Survey
BEI is the leading innovator in the Exit Planning industry, offering comprehensive Exit Planning training, marketing support, and plan creation tools to advisors across the globe. Members of the BEI advisor community have access to an established, systemized process that allows them to easily help their clients with their business transition planning.
In order for professional advisors to attract and maintain high-caliber clients for Exit Planning work, it is crucial for them to understand the state of the market and the features of their target audience. As advisors seek to help business owners and their families benefit from their lives’ work, they must have an accurate and realistic idea of their client’s goals, aspirations, hesitations, and influences.
All this and more was the intention of conducting the 2022 BEI Business Owner Survey, and in the following paragraphs we’ll share some key findings.
Register for the upcoming webinar, January 18, where BEI Founder John Brown and BEI CEO Jared Johnson, will share their take in the survey!
BEI worked with a national independent research firm in July 2022 to collect data that are statistically valid and representative of a range of business sizes and geographic regions. We received ownership-verified responses from over 200 business owners with revenue over $2.5 million and more than 10 employees throughout the US and Canada, resulting in a confidence index of 98%.
These business owners are proportionately distributed across geographic areas, industries, and age groups that make up the larger business owner population.
In previous BEI surveys (2016, 2019), business owners in the baby boomer generation responded more than any other age group, making up 76% of respondents in 2019. However, in our current survey, 77% of respondents fell between the ages of 25 - 54.
Due to the shift in the respondent’s age, a key question was raised: What are these younger owners doing to plan for the future of their ownership?
In addition to the above question, this survey intends to highlight the vast opportunity that exists for advisors to get involved in Exit Planning.
- 53% of business owners want to sell or transfer their ownership within the next 10 years.
- 80% of business owners want to stop working in their businesses in the next 10 years.
- Only 20% of owners have created written plans to transfer ownership.
- 100% of business owners will one day leave their company, whether planned or otherwise.
With the age of ownership shifting younger and the anticipated years of ownership getting longer, there is a greater opportunity than ever before for advisors to do Exit Planning with their clients earlier in a client’s ownership lifecycle.
While the opportunities highlighted above are key insights, the report also shares data on desired Exit Paths, what obstacles are most challenging to owners, business valuation methods, as well as how much planning owners have done and with whom.
The survey shared that similarly to past surveys, third-party sales are the most popular consideration for a desired Exit Path. However, other paths emerged as major considerations, which indicates that it may be up to advisors to show owners the variety of options available to them.
Additionally, a review of perceived obstacles showed a large increase in external factors including the economy and tax challenges, as well as a significant increase from 2019 of owners who believe it is too early to plan.
Lastly, in studying the data collected on estimated business value and how owners arrived at the valuation presented an opportunity for advisors to help owners better understand business value.
Read the Full Report
Owners are having more conversations with advisors from all professions and other people of significance in their lives compared to previous years.
With that said, are you prepared to be the advisor to guide your clients to exit on their terms?
Download the full report at the link below.