UBS Business Owner Client Event in Omaha Highlights Multiple Exit and Succession Options for Business Owners

November 2, 2022

Overall the Panel concurred that there are multiple exit and succession options for business owners; it all depends on what the owner(s) is looking to accomplish and it starts with discovering what their goals and objectives are as well as speaking with experienced M&A Advisors, Financial, Legal and Tax Advisors for pre-sale planning to become educated so they are better positioned to make decisions for a successful exit.

Larry Reinharz, Managing Director of Woodbridge International, spoke about the strong interest and valuations his firm is seeing on well performing companies. Despite increasing interest rates and a declining stock market, his company has sold more companies year to date 2022 versus the same period last year and will realize the strongest year since Woodbridge started in 1993. Much of what continues to drive the activity is the $1 Trillion of capital that needs to be deployed within Private Equity Groups.

The event was hosted by UBS, organized by Michael Mimick, Market Head for theMidwest and James Jack, Head of Business Owner Client Segment and attended by business owners, financial advisors, accountants, and lawyers. Some of the questions were geared towards current valuations in the M&A market and sought-after industries. Reinharz and Nick Francia, Managing Director and Private Wealth Advisor on The Capital ESOP Group with UBS, agreed that manufacturers are always in demand and obtain strong interest from buyers, investors, and lenders and Reinharz said that closing multiples this year have ranged anywhere from 4x – 10x trailing 12 months adjusted EBITDA.

Melissa Lilly, Director of Wealth Planning with UBS, spoke on various ways business owners can pass on wealth to heirs in a tax efficient manner; she emphasized the importance of taking these steps prior to running an M&A process, as once a Letter of Intent has been obtained by a buyer the owners lose flexibility on tax efficiency.

Nick Francia, spoke on ESOPs as a way to transition the company to employees over time while deferring capital gains taxes; he emphasized it’s a business succession solution, not necessarily a shareholder liquidity solution. Nick also discussed other exit options such as internal transfers, management buyouts and dividend recapitalizations.

James Jack led the panel and mentioned the importance of business owners looking at life beyond the sale; How will they spend their time? How will they be fulfilled? How will they make an impact? Reinharz agreed, noting that Clients that go through a sales process with the most amount of clarity are people who have a roadmap on their “next act.”