Over the next 15 years, the U.S. economy will experience an unprecedented increase in the number of businesses for sale as baby boomer entrepreneurs begin to retire. The result? A glut of businesses for sale and downward price pressure for privately owned companies.

Three separate studies by PriceWaterhouseCoopers, MassMutual and Marquette University show that one out of two businesses will change hands between 2005 and 2020 as baby boomers get older and approach retirement age. Tragically, the same PriceWaterhouseCoopers study revealed that approximately 75% of private business owners have no strategic exit plan on how or when they will exit their companies. An additional 25% have done little or no estate planning.

Given the stakes involved, it makes sense that as a business owner you would want to do whatever you can to increase the attractiveness, value and saleability of your business.  Creating a strategic exit plan is the first step.

Why create an exit plan and why do it sooner than later? It's simple. Exit planning delivers tangible results for savvy business owners. A well thought out exit plan is a comprehensive, integrated plan that asks and answers all of the personal, business, legal, financial, tax and estate issues involved in exiting from a privately owned business. It also provides you with peace of mind that comes from knowing that you are being proactive and taking charge of your future, rather than waiting to let the future take care of itself.

GOOD REASONS TO START NOW

• The oldest of the baby boomers was born in 1945 and is now 66 years old. The youngest of the baby boomers was born in 1961 and is now 50.

• By 2012, the number of business owners wanting to sell their businesses each year will have increased fivefold over 2006. This trend will continue for the next 10 to 15 years.

• Selling your business during the first half of the "baby boomer bubble" (2006-2012) will provide the best chance of maximizing its value because the younger baby boomers who are retiring from corporate jobs will be active buyers. In the later half of the baby boomer bubble these new entrepreneurs will also be looking to exit.

• Many business owners report that it can take as long as two years of focused activity to get your business ready to sell at a reasonable price.

• We currently are experiencing the lowest capital gains tax rates in 60 years, but tax rates are certain to increase over the next 5 years as our state and federal government battle with staggering budget deficits.

When proper exit planning is done and ample time is allocated to implement the plan--business owners are often able to reduce or, in some cases, eliminate the capital gains taxes due at the time of sale. This dramatically increases the after-tax net proceeds that you keep.

When you really think about it, deciding how and when to exit your business could possibly be the single most important financial and personal decision you'll make in your lifetime.

Why wait? Talk with one of the professionals at MidCap Advisor to understand your options.