Client Login

Fall 2023 Market Brief – Seasons

Fall 2023 Market Brief


“One day you turn around and it’s summer/ Next day you turn around and it’s fall/And the springs and winters of a lifetime/ Whatever happened to them all.”- Frank Sinatra, The September of My Years

As we look forward to summer’s end and the beginning of fall, we are reminded of parallels between the changing of the seasons and the seasonality of owning a business.  Spring is often viewed as a time for fresh growth and new beginnings.  Similarly, as a new business is started it is filled with hope and optimism and the promise of growth and good tidings.  It is no coincidence that the term “Blue Sky” can be used to describe both springtime weather and the intangible value and potential of a business.  But as spring rolls into summer and frenetic outdoor activities and vacations occupy our time, businesses deal with a similar pace: acquisition, expansion, developing new ideas, markets, and products are typical for this phase.

Businesses cycle in a rhythm similar to the seasons. The start-up phase shifts to growth and expansion which transitions into the management of a mature business.  As Baby Boomers age, the thought of retirement on the horizon or turning the page to the next chapter in their life is like watching a cold front move in.  Research shows that 99% of business owners agree with the notion that having a transition strategy is important for the owners and the employees.  Unfortunately, 79% of owners have no written transition plan and at least 50% have done no planning at all.

It is vital to consider exit planning as a core business strategy.  For the majority of our clients, a privately held business represents a substantial majority of their net worth.  Yet many have not taken the time to evaluate how to either transition or monetize their life’s work. Just like financial planning, exit planning is a process that can last months and in some cases years.  The three main phases – Discovery, Preparation, and Decision – take time to execute properly.  Starting this process is a very important shift in mind set to working “on” your business not “in” your business.

In the Discovery phase, we evaluate the income contribution of the business on personal lifestyle.  An action plan should be created to evaluate personal income needs and ensure business monetization will fulfill those needs. The Preparation phase brings these two efforts to fruition by preparing the business for a sale.  A common issue is making sure the accounting is sound and defensible and needs to be up to GAAP standard or audited. This is also the time to review ownership structure and create an efficient estate tax strategy. Once these foundational building steps are complete, the now informed owner enters the Decision phase and may decide to hold on to the business and make changes to increase efficiency and profitability, or deem the entity ready to go forward with a sales process.

It is important to realize as a business owner it is unwise to navigate the process alone.  A team approach with a good CPA, attorney, investment banker and exit planner can make a substantial impact on the final outcome.  A competitive sales process with 3-5 interested and qualified purchasers will likely yield much higher results than a sale limited to the owner’s current circle of competitors and colleagues. We have guided clients through this process for years, and while each company is unique, the key is a strong team and commitment to the process. Those who fail to plan, plan to fail.