Another firm warns that a significant number of business owners, some of them with firms producing revenues of up to $250 million per annum, haven't prepared for transition as they enter retirement.

About a third of high net worth US Baby Boomers expect to transfer businesses in the next five years, and more than a third do not have a specific plan to make this possible, with a significant number also unprepared for retirement.

The findings, produced by SunTrust, came from a Wakefield Research study of 500 US business owners aged between 54 and 72. Their annual business revenue ranged from $5 million to $250 million.

Respondents are considering selling their firms; some 42 per cent of surveyed owners have thought of selling up to a private equity firm or third-party investor, while 38 per cent have thought of passing it on to another generation of their family. Only 18 per cent have thought of letting employees buy the business.

"Baby Boomer business owners are approaching retirement at a moment when the economy is growing and a high number of private equity firms are seeking investments," Jason Cagle, head of commercial banking for SunTrust, said.

Business owners are concerned not only about their preparedness for retirement, but also about the future of their company after they depart. In fact, 40 per cent said that excessive operational disruption would prevent them from accepting an offer to purchase their company, the SunTrust study found.

Forty per cent of those surveyed do not plan to fully retire, 26 per cent would serve in an advisory capacity for their former company, and 15 per cent would pursue a philanthropic opportunity in their retirement years, the study showed.

Fieldwork for the survey was carried out between October 12 and October 19, 2018, using an email invitation and an online survey. Quotas were set to ensure statistically significant data by company size: less than 500 employees, 500-1,000 employees and more than 1,000 employees.

A number of wealth management houses, such as US Trust, Citi Private Bank, UBS and JP Morgan Private Bank, for example, advise business owners about transition. An estimated $30 trillion of wealth is due to be transferred by aging Baby Boomers in the next few years, with much of this figure is tied up in operating companies as opposed to liquid cash.

Other findings:

 -- Women are less concerned about all aspects of business transition than their male counterparts, by a margin of 4 to 14 per cent;
 
-- More women than men expect to pass down their business to an employee (9 per cent versus 5 per cent) or sell to employees (17 per cent versus 7 per cent). More men than women expect to be purchased by a PE firm or third-party investor (39 per cent versus 28 per cent);

-- Men are twice as likely to decline an offer because it would cause too much operational disruption;

-- Male business owners are more aggressive. More than a third (35 per cent) would not accept an offer if they thought it was not strong enough – compared with 17 per cent of female respondents; and

-- Women are more likely to retire fully after transitioning their business (70 per cent versus 54 per cent).