There has been significant sale activity in the private company space over the last few years as Baby Boomers edge closer to retirement and trillions of dollars change hands in the US. And yet evidence continues to pile up suggesting that entrepreneurs and business owners by and large are ill-prepared to relinquish ownership of their companies, or for what comes next, according to a paper published yesterday by Columbia Business School and US Trust.

The report, entitled The Owner's Journey, examines the sale or transfer of closely-held businesses, drawing on eight case studies. The insights presented are certainly in line with previous industry research on the matter; earlier this year, for example, PwC found that 73 per cent of US family businesses haven't established a succession plan for senior roles, while respondents expressed anxiety over the prospect of handing over the reins.

There are many possible reasons for these findings, according to US Trust and Columbia Business School: Some business owners are reluctant to make decisions they cannot change later; some want to avoid management or family conflict and rivalry; some are waiting to see if family members are ready or indeed willing to accept leadership; and others are simply too consumed with their day-to-day responsibilities.

“We are seeing an increase in what we call the 'sticky baton syndrome,' where the older generation hands over management of the firm in theory, but in practice remains in control of what really matters,” said Alfred Peguero, PwC's US family business survey leader, earlier this year.

As highlighted by Keith Banks, president of US Trust, eventually, all entrepreneurs exit their business - by design or default. But the "planless owner" is often forced to exit on other people's terms or under difficult circumstances without a meaningful transition or optimal pricing, Banks said.

“Building a successful business can be wildly exciting, all-encompassing hard work that also has led to great personal and family wealth,” said Barbara Roberts of Columbia Business School and co-author of the report with Murray Low.

She also noted that while much attention has been allocated to the start-up and growth phases of entrepreneurism, there has been a much weaker focus on the challenges that business owners face in seeking to create financial value when preparing for the exit phase and beyond.

While the solution seems relatively straight-forward - to create a structure and process that “makes sense for today and will be flexible enough to adapt to future needs” - it is admittedly challenging. “Planning can sometimes be difficult and time consuming, but it’s the best tool we have. And the earlier it is started, the greater the likelihood of a favorable outcome," the report said.

The insights suggest that there are both critical emotional as well as financial hurdles that business owners and their families need to address before they are able to feel comfortable with making important decisions for the future.