How Age Shapes Your Business Transition Plan
The thought of selling the business you’ve spent years building may fill you with feelings of fear, uncertainty or excitement. Age has a big impact on your attitude towards your business, and your feelings about one day getting out of it. Whether you’re in your 30’s and moving on from your first startup, or in your 70’s figuring out what’s next for your legacy, age plays a big part in when and how you’ll approach transitioning your business.
Owners aged 25 to 46
Twenty- and thirty-something business owners grew up in an age when job security did not exist. They watched as their parents were downsized or packaged off into early retirement, and that resulted in a somewhat jaded attitude towards the role of a business in society.
Business owners in their twenties and thirties generally see their companies as a means to an end, and most expect to sell in the next 5 to 10 years. Similar to their employed classmates who move to a new job every 3 to 5 years, business owners in this age group often expect to start a few companies in their lifetime.
Owners aged 47 to 65
Baby boomers came of age in a time when the social contract between a company and an employee was sacred. An employee agreed to be loyal to the company, and in return, the company agreed to provide a decent living and a pension for a few golden years. Many business owners in this generation think of their company as more than a profit center. They see their business as part of a community and themselves as community leaders.
To many boomers, the idea of selling their company feels like selling out their employees and their community. This is why so many chief executive officers in their fifties and sixties are torn: they know they need to sell to fund their retirement, but they agonize over where that will leave their loyal employees.
Owners aged 65+
Older business owners grew up in a time when hobbies were impractical and discouraged. You went to work while your wife tended to the kids (today, more than half of businesses are started by women, but those were different times), you ate dinner, you watched the news and you went to bed. With few hobbies and little other than work to define them, business owners in their late sixties, seventies and eighties feel lost without their business – this is why so many refuse to sell or experience depression after they do.
Age and mentality effects not only the view of transitioning the business for sellers, but also for buyers. For example, someone who runs a boutique mergers and acquisitions business may refuse to take assignments from business owners over the age of 70. They have found that this age group is so personally invested that they can rarely bring themselves to sell their business – frequently calling off the sale halfway through.
There will always be exceptions to general rules of thumb, but frequently, more than your industry, nationality, marital status or educational background your birth certificate plays a large part in defining your transition plan. To discuss your personalized transition plan, contact an Anders advisor or learn more about Anders Business Transition Planning Services.