Business owners fear they missed their best chance to sell, the report reveals. But experts advise that opportunities exist and the key to attracting the right buyer is to plan ahead. As for business owners who recently sold, most wish they’d taken more time to prepare. They would agree: start planning now to be ready when the winds shift and opportunity arrives.

Business owners are also concerned about valuations in the current market, the report reveals. Many worry about getting a fair price and regret not selling sooner. Sixty-one per cent are concerned about a lower business valuation in the current climate whilst 40 per cent regret not trying to sell sooner. When asked how they intend to exit, 54 per cent would sell to an outsider, such as a strategic buyer or private equity, whilst 36 per cent would sell to an insider such as a partner or next generation, the report states. 

UBS surveyed 416 US business owners who are looking to sell their business in the next five years and 123 who have recently sold a business. Each business owner has at least one employee and $1 million in annual revenue. The survey was conducted from April 12 to 20.

Oliver Henderson, managing director, OneBank Coverage, UBS Investment Bank, said: “While the macroeconomic environment is weighing on overall M&A activity, there continues to be a bid for high-quality, resilient, cash flowing businesses. Advanced preparation is key for taking advantage of future market windows.”

Yet many business owners are not properly prepared to sell when the time is right, the report finds. They have not taken steps to sell, for instance, by identifying professionals to help them finalize the sale or have not put the right structures in place to minimize taxes, the survey shows. They have also not taken steps to transfer their newfound wealth, by, for example, not engaging heirs in dialog about family wealth or having an estate plan in place.

When firms are sold or floated on the stock market via an initial public offering, these are important liquidity events that wealth managers track. The transfer of business assets is also an increasing focus for advisors seeking to engage with HNW clients and their families. With many Baby Boomers handing over the reins of business control, and even younger adults thinking of retirement in a few years' time, this continues to be a large area of wealth management commentary. 

Fail to prepare, then prepare to fail
And business owners who sold underestimated the time needed to prepare, the report states. Most spent less than two years preparing for the sale and a vast majority regretted not preparing sooner.

“Before engaging an investment banker or soliciting interest, educate yourself on potential tax strategies. Decide whether any ownership interests should be transferred to family or charity so they can also benefit from the transaction. As for timing, the earlier the better. We often work with clients years before a transaction to get them, their businesses and families prepared for a sale,” Ann Bjerke, managing director, head of UBS Advanced Planning, said.

Leslie Lauer, managing director–wealth management at The ESOP Group, private wealth advisor, believes that a minimum period of two years is needed to prepare for the sale.

What to consider
When selling, business owners should also consider more than just the sale price, the report reveals. Business owners have concerns beyond the sale, worried for instance that the buyer won’t treat the employees well or won’t have as much of a sense of purpose.

“A successful post-sale road map often requires owners to redefine their purpose as well as roles and responsibilities for themselves and family who will be involved in new philanthropic or entrepreneurial pursuits,” Heather George, executive director/senior strategist at UBS Family Advisory & Philanthropy Services Americas, said.

But they look forward to new opportunities, such as traveling or starting a new business venture. Most business owners who recently sold also sought advice from their financial advisor or an accountant or lawyer or family , the report reveals.

“For many business owners, their business encompasses how they spend their time, their social lives and purpose. Talking about these factors with an advisor when constructing a financial plan is integral in getting emotionally and financially ready for life after a business,” James Jack, managing director, head of UBS Business Owners Client Segment, said.

Swiss bank UBS said that it is never too early to plan, but it can be too late, especially for maximizing net proceeds. Strategic planning and tailored solutions, including financial and investment banking expertise, can help throughout the lifecycle of a business. With the right guidance, business owners can proceed with passion and exit on their terms, embracing their future with new enthusiasm, the report concludes.