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Practice Management > Succession Planning

More Wealthy Business Owners Looking to Retire, Move or Sell: Survey

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What You Need to Know

  • Two-thirds of wealthy business owners say that COVID accelerated their plans to retire or sell their business, Clarfeld found.
  • More than half of business owners in the wealth manager's survey said they had relocated since March 2020.
  • Their next big worry: federal tax changes.

Nearly all wealthy business owners in a recent study said the pandemic had affected or disrupted their businesses, and two-thirds reported that it had also accelerated plans to retire or sell their business, Clarfeld | Citizens Private Wealth, a wealth manager and multifamily office, reported this month.

The study found that the pandemic confronted business owners with some tough choices: 21% applied for PPP loans, another 21% closed branches or satellite offices, and 19% laid off employees.

Not only that, half of study participants said they plan to sell their businesses because of the pandemic.

The findings are based on a nationwide survey Clarfeld conducted in July among 150 high- and ultra-high-net-worth business owners across industries and business sizes.

Succession Plans

Seventy percent of survey respondents said they had planned leadership changes owing to pandemic-driven challenges. Thirty-four percent decided to retire early, and 35% sped up their succession plans. Nine in 10 planned to leave their businesses to a family member — a spouse, children or grandchildren.

Eighty-nine percent of business owners expressed confidence that the next generation will be a successful steward of their business. Interest in taking over the family business is increasing among the successors as well, according to the study. 

Clarfeld found that 21% of children or grandchildren who had previously purported to be uninterested in succeeding their predecessors are now interested in taking over the family business post-pandemic.

“Succession planning is a hugely crucial consideration for business owners looking to provide seamless continuity — especially in a volatile period,” Joan Bozek, Clarfeld’s director of trust services and chief fiduciary officer, said in a statement. “With the counsel of a trusted advisor, bringing family members and potential successors to the table for these conversations ensures accountability, interest and ultimately a smooth transition when the time comes.”

Relocating the Business

Besides succession planning considerations, Clarfeld’s survey found that since March 2020, 65% of wealthy business owners have moved their businesses. Thirty-four percent relocated to lower-tax states, 31% wanted to be closer to family and 27% moved because the remote environment offers flexibility in location.

Three-quarters of business owners surveyed envisioned physically moving their business in the next three to five years. Clarfeld said this finding is underscored by the fact that 80% of owners operated their businesses either fully remotely or hybrid in-person and virtually through the pandemic.

“It’s no surprise to see that like many Americans, business owners have chosen to relocate as a result of the pandemic, but no decision should be made hastily,” Donna Cuiffo, Clarfeld’s director of family office services, said in the statement. 

“There are very specific considerations, from [state and local tax] implications to payroll updates and changing domicile that must be ironed out before any move.”

Value of an Advisor

Business owners do not make changes lightly. Twenty-three percent of respondents said they typically consider input from business partners before making financial decisions related to the business; 19% look to wealth managers and 13% to accountants. 

Financial advisors have been on the scene during the pandemic, offering insight and expertise, according to the survey. Fifty-nine percent of respondents said their financial advisors had proactively approached them around succession planning changes in light of the pandemic.

Looking ahead, non-pandemic worries are keeping wealthy business owners up at night. Forty-nine percent of those surveyed said they anticipate federal tax changes will have a significant effect on their businesses.

“We’re encouraged to see business owners having productive conversations with their wealth and tax advisors in the current environment, as tax policies are evolving quickly and the M&A market remains hot,” Jose Reynoso, director of advanced tax and estate planning/trust services at Clarfeld, said in the statement. 

“Sophisticated advisors can help clients both satisfy current needs and see around corners to leverage tax laws to their advantage.”


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