ExitMap Survey Predicts Upsurge In Transfer of Business Wealth

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First Exit Planning Industry Survey Sees Largest Transfer of Generational Wealth on Horizon

“When you think about it, the transfer of half the privately held businesses in the United States is breathtaking in its scope. Keep in mind that these are mostly the more mature, more profitable and more established companies in their space," said John F. Dini, CExP, CEPA, Founder & CEO of ExitMap.

First of-its-kind survey reveals that easing of pandemic restrictions could lead to an upsurge in business transfers. With recent setbacks instigated by the pandemic, Baby Boomer business owners aren’t enthusiastic about the opportunity to rebuild their businesses, which means they may be looking to strategize exiting or selling their company, accelerating the largest generational transition of wealth in history.

The survey results revealed, despite the pandemic, all professionals reported an uptick in both exit planning inquiries and client engagements in 2020. Over 60% of respondents practice in companies with five or fewer employees, meaning small advisory firms are dominating the exit planning space. Exit planning has had a reputation as an activity reserved exclusively for privately held mid-market companies. However, over 50% of all responses indicated that advisors get half or more of their business from Main Street (under $3 million enterprise value) companies.

ExitMap® conducted this first-of-its-kind survey which aimed to unveil and understand the rapidly growing exit planning profession and its best practices and practitioners. The 40-question survey gathered information from 337 professionals who identify as exit planners, exit planning specialists or members of a professional exit planning association. The respondents represented 43 states and the District of Columbia.

Reflecting the burgeoning awareness of the industry, almost 40% of exit planning practitioners have been practicing for less than three years, and the majority for less than five years. In addition, four out of five professionals in the field currently generate less than half of their revenue from exit planning. With the substantial percentage of recent entrants to the advisory ranks, the exit planning industry is poised to become a major factor in the transfer of Baby Boomer wealth.

John F. Dini, CExP, CEPA, Founder and CEO of ExitMap, and author of Your Exit Map, Navigating the Boomer Bust states, “When you think about it, the transfer of half the privately held businesses in the United States is breathtaking in its scope. Keep in mind that these are mostly the more mature, more profitable and more established companies in their space. Baby Boomers aren’t running mom and pop startups. They own companies that employ millions of workers. The shift in the entrepreneurial class will be seismic.”

Exit Planning is an emerging business advisory field focused on helping business owners examine and plan their options of transferring or selling their involvement or ownership of their business. The field has rapidly grown with the increased activity of Baby Boomer business owners preparing to transition from the active participation or ownership of their company. Exit Planning assists business owners with a broad scope of advisory tactics including contracts, tax strategies, financial planning, retirement income and needs, transfers of operational duties, risk management, insurance, estate planning, appraisal and valuation, as well as financial coaching.

ExitMap®, LLC is a software company specializing in exit planning sales and marketing services. Copies of the complete survey results are available for complimentary media-only download at http://www.exitplannerssurvey.com using the code NEPS21.

For comments or questions about the conducted research, the exit planning industry or media inquiries, please contact:
Hannah Chalker
ExitMap® LLC
(800) 653-5405
HChalker@exitmap.com

SUPPLEMENTAL SURVEY INFORMATION AND RESEARCH FINDINGS

Introduction
According to the Small Business Administration, there are roughly six million businesses with between five and 500 employees in the United States. In the last 10 years the percentage owned by Baby Boomers has dropped from about two thirds to around 50%. That is still three million companies to be transferred or sold. Assuming an even distribution over the next 15 years (when the youngest Boomer will be 70 years old), that means an average of 200,000 business owners a year, 16,666 a month, or over 800 a day are looking for their transfer strategy. It is the largest transfer of wealth in history.

According to John F. Dini, CExP, CEPA, Founder and CEO of ExitMap, and author of Your Exit Map, Navigating the Boomer Bust, “Clearly, the industry is trying to catch up to the needs of the business community,” said Dini. “The International Business Brokers Association (IBBA) claims between 8,000 and 10,000 sales annually. That leaves hundreds of thousands of owners looking for an alternative exit strategy.”

Survey Method and Subjects
The 2021 National Exit Planners Survey was distributed to 3,393 professionals between February 1 and February 28, 2021. Recipients of the survey were either certified in exit planning, advertise themselves as business exit planning specialists, or practice in a planning-related specialty and are members of a professional association for exit planning professionals. The 40-question survey asked respondents about their practices, training and their clients.
A total of 337 surveys were submitted, representing practitioners in nine specialties across 43 states, plus the District of Columbia. Statistically, the number of responses allows a confidence level for the findings of 95%, plus or minus 5%. The majority of professionals who practice exit planning, and especially of those who hold certifications, are Financial Planners or Business Consultants. Business Brokers were the third most represented, with about half as many respondents as Financial Planners or Business Coaches. “Exit Planners,” those who specialize in coordinating the various skills and developing options, represented about 12% of survey respondents, followed by accountants, attorneys, insurance agents, appraisers and bankers.

Research Findings
Despite the pandemic, all professions reported an uptick in both inquiries and client engagements in 2020. Several other studies have documented the lack of preparation for transition among the majority of business owners. This was supported by the fact that almost two-thirds of all client engagements originate via referrals from another professional.
Four out of five practitioners generate less than half their revenue from exit planning. The majority of Financial Planners utilize exit planning discussions as an entry to their other services, and that profession was also the most likely to provide such services for free. With the substantial percentage of recent entrants to the advisory ranks, the exit planning industry is poised to become a major factor in the transfer of Baby Boomer wealth.

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Rich Mullikin
Mullikin Communications
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