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.
