Baby boomers - plan next step

Jeremy Tauri.

New Zealand's business landscape is set to change dramatically over the next few years as increasing numbers of baby boomer owners retire and look to sell their firms.

ASB has reportedly estimated about a third of its business-owner customers are baby boomers who will want to retire before 2022.

They are at the helm of everything from the smallest SME to large businesses.

This demographic shift presents a challenge and an opportunity.

If a lot of people are retiring at the same time, and looking for buyers for their businesses, there is a risk that will erode the value in those firms.

If this is mixed with an unrealistic expectation of a businesses sale value then this can further erode values and time left to enjoy retirement.

Good planning and strategic planning of the process will be even more important than they normally are to those looking to get out of the business world.

Good advice should form the basis of the process.

If you are planning an exit strategy, you will need to seek help from your accountant, lawyer and other business advisers to work out what you would like it to look like.

Do you envisage a sale where you sign on the dotted line and walk away? Or, if this is a business you've spent many decades building, would you be more comfortable with a staggered approach to stepping back?

Good advisers can also help you to work out how to maximise your business' value - whether that is through better, clearer business plans, more organised records and more compelling reporting, or efforts to re-engage clients to maximise profits before a sale.

You may also be able to identify people within your business who have the potential to step up, if they are given the right coaching now.

On the other side of the deal, there are opportunities for the next generation of business owners.

If you can identify a business you can see potential in, and an owner who is thinking about moving on, you can start laying the groundwork for the deal.

Many retiring business owners like the idea of someone spending a number of years working in the business before taking over - it gives them more confidence that the buyer is a "safe pair of hands".

Some are even willing to help a new owner with finance into the deal, if they are convinced they are the right person for the business.

If you can identify an opportunity like that now, you may be able to negotiate an outcome that would not have been possible for someone coming fresh into the deal.

It's in everyone's interests that the business community successfully navigates this period of change.

Getting the next generation behind the wheel of the country's businesses is vital if we want to steer the economy into a solid position for the coming decades.

- Jeremy Tauri is an associate at Plus Chartered Accountants.