Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

June 4, 2010

Does A Business Transfer To Children Make Sense?

By Joseph Eneldas

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When the ownership of a business is transferred by its owner, who is often also the founder, several pitfalls need to be avoided to make the transfer successful.

Approximately fifty percent of all business owners will sell their business in the next fifteen years, as recent statistics tell us. Only twenty-five percent of the business owners know at this time how they will exit. As a matter of fact, one SBA study indicates that eighty percent of all businesses can not be sold due to a variety of reasons.

Thus, it comes with little surprise that a business owner will either turn to his children, or hire a qualified professional to facility a transferal upon retirement.

Typically, eighty percent of an entrepreneur’s net worth is tied up in the business, and thus, transferring the business requires the securing of sufficient funds for the founder’s life in retirement. And whereas most often the first reaction is to divide the business equally among the children, this is by no means the most “secure” way to ensure continued funds for the owner.

From an economic point of view, the owner has to evaluate who is truly the most talented child to  manage the business properly and to ensure continued prosperity.

Over the years, qualified business brokers such as ANA have helped many business owners to develop a successful exit strategy, either by transferring the business to children or by transferring the business to a new (outside) owner. It is a smart move on the business owner’s part, to start evaluating his/her options as early as possible, in particular, as they pertain to business valuation and transfer confidentiality.

Written by Achim Neumann

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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Andrey O, Investor

“Finally enjoying retirement after recently selling my business using the services of A Neumann & Associates. Joe Oddo provided the conduit to a successful transaction. Joe knew when to inject input and when to simply listen and allow the buyers to vent, step back and regroup. The outcome met our expectations and got us to the finish line, which included my staying with the company six months in order for the buyers to get their footing and keep our workforce in the loop. He helped at every step by providing his expert guidance & resources. Thank you!”

Emily Parker Myers, Co-Owner - Myers McRae

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

Gaurav Tyagi

“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

Ravi Bhutani

“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

Pat Iammatteo, Owner

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Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

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Dennis Frazier

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