The Covid crisis had a significant impact on all sorts of businesses. Many of us heard of and witnessed firsthand the negative impact Covid had on small businesses, and even wealthy businesses.
One positive consequence that was created out of the Covid crisis was the push for wealthy business owners to “hasten retirement and speed up succession plans.”
The “Success and Succession” study, “which looked at the impacts of Covid on business decision making among high-and ultra-high-net-worth business owners, found that two-thirds reported that the pandemic accelerated plans to retire or sell their business.”
The Ipsos study surveyed 150 business owners with 2,500 employees, a net worth of about $2 million to $10 million and investable assets of more than $5 million.
The research indicated that “21% of wealthy business owners applied for loans through the Paycheck Protection Program, 21% closed branches or satellite offices, 19% laid off employees and half of wealthy business owners planned to sell their businesses.”
Also, the research showed that 34% of respondents retired early and 35% accelerated their succession plans.
Most of the business owners (88%) plan to leave their businesses to a family member, including spouses, children and grandchildren. Many are confident (89%) that the next generation will be a successful steward of their business, the survey found.
It is clear, based on the research, that the Covid crisis forced wealthy business owners to weather challenges that they may not have seen coming. Uncertain times are a great reminder of why it is always a good thing to have a plan, along with an advisor to help you create that plan and adhere to it in times of stress.
See Jacqueline Sergeant, Covid Forcing Wealthy To Speed Up Business Succession Plans, Retirement, Financial Advisor Magazine, September 17, 2021.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
https://lawprofessors.typepad.com/trusts_estates_prof/2021/10/covid-forcing-wealthy-to-speed-up-business-succession-plans-retirement.html