Join us for our installment of the Pacesetters Doing Business series featuring Point32Health on August 29, 2024.
08/29/2024
3:00pm - 4:00pm
Virtual
Join us to hear from remarkable Latinas who have overcome unique hurdles to achieve success in their careers.
09/11/2024
4:00pm - 5:30pm
PwC
The Fierce Urgency of Now Festival brings Boston’s diverse young professionals together with business leaders, organizations, and their peers to build connection, advance careers and ignite positive change.
09/14/2024 -
09/17/2024
Suffolk University
Go deeper than basic DEI training to achieve higher productivity, satisfaction, and revenue growth with our new corporate workshop.
Join our Transformational DEI Certificate! Our comprehensive learning & development offerings are designed to connect and grow strong leaders who lead both inside and out of the office.
Our Women’s Leadership Program enables you to take your leadership to the next level by arming you with the most in-demand leadership toolkit.
Our Boston’s Future Leaders (BFL) program provides emerging leaders with a socially conscious and civically engaged leadership toolkit, as well as the opportunity to apply their knowledge through experiential assignments.
City Awake empowers young professionals in a variety of ways that encourages these rising leaders to stay invested in the region’s future success.
We are developing an ecosystem of corporations and partners with the influence and buying power to transform economic inclusion for minority business enterprises (MBEs).
BIMA (the Boston Interactive Media Association) serves a vibrant community of like-minded professionals from agencies, brands, publishers, and ad-tech companies with business interests in the New England market.
For 30 years, the Chamber’s Women’s Network has connected female professionals of all background and career levels. Today, our Women’s Network is the largest in New England, strengthening the professional networks of women each year.
The Massachusetts Apprentice Network convenes employers, training providers, and talent sources interested in developing and implementing apprenticeship programs in occupations across industries and statewide in fields such as tech, advanced manufacturing, healthcare, financial services, and more.
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Explore our mission and values to better understand how we are leading the business community forward.
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Millions of U.S. baby boomer business owners are approaching retirement. And many of those people are preparing to pass the company reins to their family members and employees to create a legacy. In fact, an estimated $10 trillion in family-owned businesses is expected to change hands by 2025.
For the owners of privately held companies, it can be complicated to retire and cash out. That’s why they often turn to their banking partners for advice in navigating the financial elements of the transition.
As the No. 1 lender to middle-market, family-owned American businesses; Wells Fargo brings years of experience to the roles of consulting and supporting business owners through generational successions.
Here are five steps we recommend that Boston area business owners take to prepare for and to make seamless ownership transitions from one generation to the next:
1. Start Planning Early
Begin transition planning at least five to 10 years in advance. It takes time to do it right. Planning provides time to develop a formal board of directors and assemble a team of advisers to guide business owners through the process.
In addition to securing a knowledgeable banking partner, owners should build relationships with trusted lawyers and accountants. They will prove invaluable. Effective advisers also advocate for transparent and accurate financial reporting. That helps valuate a business and, if needed, secure third-party financing for the sale. Having skilled accountants, lawyers, and bankers by the owner’s side early is essential to a well-organized ownership transition.
2. Build a Strong Internal Accounting System
A robust internal accounting system can make or break the sale’s success, especially if it involves non-family members or third-party buyers such as private equity or strategic acquirers.
Most sales to non-family members require independently produced financial statements that give an accurate picture of the company’s balance sheet (assets and liabilities) and income statement. Establishing a sound accounting system and having a financial officer beforehand removes the stress of producing three-to-five years’ worth of financial statements from scratch when it comes time to sell. Skipping this step can be costly and can produce a low-ball offer.
3. Build a top-Notch Management Team
Before initiating a sale, be sure to build a proficient management team. Having solid management and dedicated employees adds considerable value for buyers. Remember:
4. Get a Third-party Valuation
Pouring years of blood, sweat, and tears into a family business can create a skewed view of a company’s true worth. Consider soliciting a third-party business valuation to ensure an accurate picture of its worth well in advance of a transition. A trusted, independent advisor is indispensable in determining the proper market value based on the company’s cash flow and income‑producing capabilities. Consult with accountants, bankers, or lawyers for recommendations about getting a proper valuation.
5. Consider Shouldering Some Financing
To help the next generation buy the business, founders can take on some of the financing themselves in the form of subordinated debt, preferred stock, employment contracts, or earn-out provisions. When feasible, buyers benefit from a combination of bank financing and seller financing. Seller financing increases flexibility. It also limits how much the new owners will have to depend on third parties for financing.
Today is certainly a favorable time to sell a business. Banks, strategic buyers, and private equity firms are flush with cash. Prepare now by investing in transparent accounting systems, assembling trusted advisors, and ensuring loyal employees and management teams for a smooth transition, when the time is right to create a legacy.Gregory G. O’Brien is an executive vice president and division manager for the Wells Fargo Regional Commercial Banking group. In this capacity, he is responsible for all Commercial Banking activities in the New England region. In addition to commercial banking, Greg has broad experience successfully managing several industry verticals, including energy, transportation, environmental services, and leveraged finance. Email him at [email protected].
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