Reflecting the new psychological and financial landscape for businesses, two-thirds of wealthy business owners have ramped up their plans to retire or sell their businesses during the COVID pandemic, according to a new survey.
A survey by Klarfeld Citizens Private Wealth found that 66% of business owners with high net worth said the pandemic has prompted their plans to sell or retire their business.
Half-plan to sell your business because of the pandemic.
The survey looked at 150 business owners with net worth of at least $ 2 million and investable assets of $ 5 million or more. It was carried out online in July by Ipsos on behalf of Klarfeld, which provides banking and wealth management services to high net worth individuals.
Klarfeld said wealthy business owners tend to overestimate their time and family during the pandemic and have made the decision to downsize their work and business.
“They have reset their priorities,” said Jonny Bozek, director of trust services and director of trust at Klarfeld. “Their death rate has become more real. “
Tax uncertainty and the growing prospect of higher taxes on the wealthy are also adding to the pressure on business owners to sell. President Joe Biden, the Senate and the House have all proposed an increase in the capital gains tax rate and possible property tax changes, which would increase the tax deduction for any business sale. Biden and Democrats in Congress are also proposing higher tax rates for top earners.
“They realize that, for those who are successful, now is the time to monetize this business,” Bozek said.
Most – 88% – plan to pass their business on to family members, including spouses, children and grandchildren.
The threat of the pandemic and high taxes have also prompted business owners to think about moving forward. Two-thirds of wealthy business owners surveyed said they moved their businesses during the pandemic. Main reason: taxes, 34% going to less taxed states. The second reason was to be closer to family and the third was remote work, which offers a more flexible space.
Of course, not all companies can function, and Klarfeld’s survey focused heavily on service companies and technology-related fields, which are more easily offshored. Still, three-quarters of business owners surveyed plan to physically relocate their business within the next three to five years, especially if taxes rise, with heavily taxed states like California, New York and New Jersey doing less. become attractive.
“Where do I want to live? said Bozek. “If taxes go up and the economy is affected more, I think this trend will continue.”