By staff writer
June 2019 — As the baby boomer generation retires from the workforce, the need for business succession planning continues to grow. This is keeping at least one group busy: accountants and advisers.
“Over the past few years, we’ve seen significant growth in the need for succession and exit planning services due to the concentration of businesses that are owned by baby boomers who are retiring on a daily basis,” Christopher Meshginpoosh, managing director of Kreischer Miller, told Invest:. “Many of the owners of our clients are trying to fill their bench of future leaders or determine which exit options make sense for them in light of their long-term goals,” he said.
Although boomers are staying longer in the workforce and they continue to drive the U.S. labor market, business owners who were born between 1946 and 1964 are having a hard time transitioning their companies to the next generation of owners. According to Deutsche Bank Research an estimated 10,000 people turn 65 each day, which is the standard age for retirement. The Census Bureau estimates that by 2030, all baby boomers will be older than age 65.
“There is potential for a talent void as baby boomers leave the workplace. This represents a tremendous opportunity for younger professionals as they are presented with more career opportunities,” James Bartolomei, Principal at HBK CPAs & Consultants, told Invest:.
The increased number of boomers retiring each day presents several challenges for employers, including the need to provide the right tools for every party involved in the transition process. “Companies need to make sure they have mentoring and training programs in place to allow a smooth and effective transition from one generation to another,” Bartolomei said.
Some accounting and advisory firms, such as Kreischer Miller, have seen a great deal of interest in the formation of employee stock ownership plans (ESOPs), which has driven them to develop a deep expertise in that area.
“In the right situations, ESOPs provide a tax-efficient method for owners to gradually transition ownership to their employees, allowing the business to continue to thrive as an independent organization,” Meshginpoosh said.
According to Generational Equity, there were some 12 million baby boomers who owned a business in 2015, and 70 percent will be retiring over the next couple decades.
Although the exit of the boomers from the workforce presents numerous challenges for the economy overall, it translates into opportunities for the youngest generations. Many Philadelphia accounting experts are positive about the market.
“The fundamentals that our clients are showing us are great. Earnings are good, the businesses are solid and they’re growing organically as well as through acquisitions. Overall, the Philadelphia economy is expanding and we’ll continue to see a lot of private equity pumped into the Philly market,” Christopher Bruner, managing partner of EY, told Invest:.
For more information about our interviewees visit:
Kreischer Miller: https://www.kmco.com/
HBK CPAs & Consultants: https://www.hbkcpa.com/