Introduction
The aging of the baby boom generation (those born between 1946 and 1964) is creating a burgeoning opportunity for ownership succession and estate planning for Baby Boomer Business Owners (“BBBOs”). There are numerous estimates of the magnitude of this opportunity. According to one study, 72% of owners of private companies plan to have a monetization event, and 62% of those owners stated that their time frame for that event is within five to six years. Another survey found that 50% of business owners over the age of 55 plan to sell their companies within the next three years; however, only 10% have developed a written ownership succession plan. Although BBBOs have many different objectives when developing their ownership succession plans, their top priority – by an overwhelming margin – is minimizing taxes.
Most experienced advisors have an in-depth knowledge of the traditional ownership succession planning paths such as a sale to a strategic buyer, a sale to a private equity group, making lifetime gifts of ownership interests to family members, and a management buy-out, but few have much experience using an Employee Stock Ownership Plan (ESOP) in exit planning.
