Heading for the Exits press release 04-14-10 final by xiuliliaofz


									Media Contact:
Rob Solomon
Rothstein Kass


           Latest Research Report by National Accounting and Advisory Services Firm
                      Examines Motivations / Impediments to Potential Sale

Over a Third of Businesses Exploring Sale Have Never Performed a Formal Business Valuation

New York, NY – April 14, 2010 – Rothstein Kass (www.rkco.com), an international accounting
and advisory services firm, today introduced “Heading for the Exits: Preparing for the Sale of a
Family Business,” a survey report that evaluates the near- and intermediate-term outlook for
family business owners considering the sale of a majority stake. The two-part report includes the
findings of a survey of 382 C-level executives of first-generation, family-owned enterprises that
were actively considering sale of a majority stake in their companies. “Part One: Best Laid Plans”
addresses the motivations and concerns associated with selling a family business and finds that
inaccurate or outdated business valuations can make it more difficult to determine if a proposed
sale will yield a fair price. “Part Two: Eyes on the Prize,” examines how family disputes and
insufficient attention to advanced planning functions can limit after-tax profits resulting from the

“The Rothstein Kass Commercial Services Group acts as trusted advisors to public and private
businesses of all sizes and across all industry spectrums. The entrepreneurial spirit of our firm is a
quality we share with the family businesses we serve. Our reputation for superior service and our
extensive understanding of M&A practices facilitates our work with private equity firms and their
portfolio companies. This affords our professionals with a unique perspective on the outlook for
family-owned enterprises as they ponder sale of the business in the current capital market
environment,” said Tom Angell, Principal-in-Charge of the Commercial Services Group and
Private Equity practice at Rothstein Kass.

“Our latest research suggests that for almost all companies pursuing a sale within the next two
years, monetizing the value of the business is a vital motivation, with nearly 97 percent of survey
respondents reporting that liquidity concerns factor into their decision to sell. At the same time,
nearly 95 percent of business owners reported that getting the best price remains a central
concern. Outdated or inaccurate valuations make it more difficult to determine the optimal sale
price in a proposed transaction. With that in mind, it was somewhat shocking to discover that
over a third of firms considering sale of a majority stake have never had a formal business
valuation performed.”
Research for “Heading for the Exits” was conducted by Russ Alan Prince, a leading authority and
counselor on private wealth, and Hannah Shaw Grove, a widely recognized expert on the
behaviors and finances of wealthy individuals. Companies included in the survey reported
majority ownership by family members, first-generation control with a family member holding
the senior-most position, and that immediate or extended family members were employed by the
family business. Approximately 44 percent indicated that they planned to sell a majority stake
within the next 24 months, with the balance of respondents indicated that they had a timeframe
for sale of two years or more. Insight into the findings was provided by the principals and
professionals of the Rothstein Kass Commercial Services and Family Office Groups.

“As first-generation family business owners initiate the sale process, there are many compelling
reasons to consider sale to outside interests. However, factors from market conditions to family
concerns will ultimately convince some owners to pursue intra-family transactions. For example,
in a low interest rate environment, the tax advantages of transferring assets to family members
can be magnified. In many cases, transferring effective control can help to establish a family
legacy while creating a stable stream of income for the retiring owner,” said Rick Flynn, a
Principal in the Family Office Group at Rothstein Kass. “Our research suggests a generational
disconnect regarding the preparedness of family members to assume control. Over 92 percent of
family business owners pursuing a sale reported that no family member is able to take over.
However, 61 percent of family members that oppose a sale to outside interests believe that a
family member should be given the opportunity to run the business. The lack of agreement on this
issue suggests a need for enhanced communication and active mentorship of the succeeding
generation to bridge the divide.”

“Heading for the Exits” is available online at the recently enhanced Rothstein Kass website
(www.rkco.com). Among other notable findings of “Best Laid Plans”:

       Nearly 97 percent of survey respondents report that liquidity concerns factor into the
        decision to sell the family business
       95 percent of participants reported that getting best price remains central concern
       Almost 92 percent of family business owners are concerned about the financial
        performance of the business enterprise
       65 percent of survey respondents report that limiting stress and disputes within the family
        are important concerns
       Nearly 45 percent expressed concern about the availability of credit, with 69 percent of
        those pursuing a short term sale in agreement.
       Nearly 30 percent of companies considering sale within the next two years have not had a
        formal business valuation in the last three years
       More than 70 percent of businesses with a longer timeframe for sale have not had a
        formal business valuation in the last three years
Significant findings from “Eye on the Prize:”

       Fewer than 27 percent of respondents have taken steps to mitigate the tax consequences
        of the sale of a majority interest of the family business
       The most commonly reported reason for not pursuing advanced planning – at roughly 47
        percent – is because other family members will need to get involved
       Almost 70 percent of family members would oppose the sale of the business to outside
       Over 87 percent of family members opposing sale to outside interests are concerned that
        they won’t get a fair price
       61 percent of family members opposed to a sale to outside interests believe that other
        family members should have an opportunity to run the company
       More than 66 percent of business owners planning a sale within two years and nearly 50
        percent of all respondents have already transferred shares in the company to family

About Rothstein Kass:

Rothstein Kass is a premier public accounting and advisory services firm that has served privately
held and publicly traded companies, individuals, and families for more than 50 years. Rothstein
Kass has offices in California, Colorado, New Jersey, New York, Texas and the Cayman Islands,
each of which has received recognition as a “Best Place to Work.”

The Rothstein Kass Commercial Services Group provides essential and complementary
professional services to public and privately-held businesses, private equity and venture capital
funds and their portfolio companies, broker-dealers and registered investment advisors, as well as
to high-net-worth individuals and families.

The Rothstein Kass Family Office Group offers a wide range of financial, wealth planning and
lifestyle management services to family offices and high-net-worth individuals. Composed of
seasoned financial professionals and certified public accountants, the Family Office Group
applies proven expertise with the utmost discretion and attention. Clients include business owners
and members of the financial services, entertainment and sports communities.

About the Authors:

Russ Alan Prince is the world’s leading authority on private wealth, the author of 40 books on the
topic, and a highly-sought counselor to families with significant global resources, and their
advisors. He is co-author of Fortune’s Fortress: A Primer on Wealth Preservation for Hedge
Fund Professionals.

Hannah Shaw Grove is a widely recognized author, columnist, speaker and an expert on the
mindset, behaviors, concerns, preferences and finances of high-net-worth individuals. She is co-
author of Inside the Family Office: Managing the Fortunes of the Exceptionally Wealthy.

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