The recent stock market corrections caused me to think about what’s coming for private business owners, especially those who are part of the baby boomer generation. Public businesses and private businesses do not fluctuate in value synchronously. Investors in public businesses try to anticipate the future and the value of the business will change quickly. Private businesses are affected more by the current economy, which means there is a lag until the economy impacts the business during an actual recession.
Companies owned by professional investors usually put in place a strategic plan to build their organization and its public profile. Their intent is to maximize returns upon the eventual exit of its investors. All major business decisions to pursue acquisitions or investment in facilities, geographic or product expansion, technology, systems, personnel, etc. are influenced by the short and long term goals of ownership and the strategic plan. The management team and their advisors are familiar with the preparatory steps necessary to position the company for an eventual transaction. They each play a part in building the company’s profile so that it is appropriately positioned when it is time for an investor exit.