As a passionate businessman, I have a great opportunity at Alberta Business Exchange to view all kinds of businesses, meet a multitude of entrepreneurs, and see how these entrepreneurs handle challenges such as labour shortages, rapid growth, legislative changes that affect their business, and a host of many other things. Watching and learning from how these amazing individuals have responded to the economic downturn in 2008 has been one of the most interesting opportunities and has resulted in a new way of helping owners transition out of their businesses with their nest eggs intact in spite of lower cash flow.
It is almost uncanny to see how ‘seasoned’ business people quickly positioned for the storm. It makes sense; they have been through the storm before because of their age (usually baby boomers) and had the skills and knowledge to save their retirement and much of their life’s work.
At Alberta Business Exchange, we have been listening to clients and watching the market carefully. We understand the needs of baby boomers and have responded by aligning with a number of private equity groups that want to invest in businesses when the owner wants some cash now, the knowledge that retirement is secure, the ability to work for a few more years, and a guaranteed exit plan that will result in receiving the highest value for the greatest part of the business.
So how does this actually work? Let’s say you sold 35 per cent of your business now. Instantly, your retirement is secured. The private equity group does not interfere in the business except to provide any assistance you specifically requested. (These groups can provide invaluable governance and financing capabilities for expansion, etc.) Together, you plot out a course for retirement. The future ‘final’ buyout is planned and the formula for the buyout is established. You might not know the final number of the buyout, but you have a pretty good idea based on your past experience.
You and the other investors work together to develop a plan to ultimately transition the business. Often this means grooming a new manager and/or bringing in consultants to ensure that the business remains solid through the anticipated transition.
Security now. A guaranteed exit. And a clear vision to retirement. For many this is the perfect scenario.
If you would like to discuss how this strategy might fit into your retirement plans, please contact us.
Let us Become Your Business Sale Advisor
In a nutshell, our transaction advisory services are focused on you—your questions and concerns, and the emotions you experience throughout the process. We become another of your trusted advisors, along with your accountant and lawyer, someone who understands you, who you can lean on when you need help.