The urgency for financial planners and accountants of the baby boomer generation to put in place a succession plan or exit strategy is gaining momentum and presenting younger SMSF practitioners with a unique opportunity to purchase successful businesses.
“The size of the succession and exit opportunity is about $3 trillion – so there’s about $3 trillion in privately held businesses, many of them family, that will change hands over the next 10 years,” Succession Plus founder Craig West told attendees at last week’s NowInfinity International Conference in Hawaii.
“What happens in privately held businesses is that if they don’t transfer successfully, the money disappears – no one wins or loses in that transaction, there’s actually only a loss and the wealth evaporates or disappears.
“Some of the key statistics that you need to understand is that in 2013, the average age of a business owner is 58, which has gone up three years in the last three years, and 64 per cent of them would consider selling if they were approached.”
West said there was a big opportunity in the market to buy out baby boomers.
“There is a potential to make acquisitions in that particular market,” he said.
“But guess what, they’re laggards. They’re not up to speed, they’re not using Xero or any of that stuff because they’re just not in that space.
“That’s terrible if you’re that accountant, but it’s great for you guys because there’s this business sitting right there with good clients, a great database and they probably have a big client base that doesn’t even know what an SMSF is or have a plan in place for what you could possibly do with it.”
He urged delegates to consider accounting businesses that did not have any knowledge of or experience in SMSFs, but had many clients.
“They’re all out there and there’s a heap of them for sale,” he said.
“So why wouldn’t you look at acquiring those to build them up, add SMSFs into it, add succession planning tools?
“There’s so much more you can do to add significant value to that client base.”
