The Annual Survey of Entrepreneurs (ASE 2016 Data) provides an interesting insight into the business owner’s exit strategy. An extract of the United States data, broken down by the categories of all reporting firms, minority, non-minority, and Black or African American business owners is provided in Table 1. While there is some variation amongst these categories of business owners, the data does appear to track the All Firms Data. Approximately 1/3 of businesses reporting in the ASE do not have a current exit strategy, with another large segment of business owners willing to walk away or liquidate their business as their exit strategy. However, approximately 8% of the businesses identified an exit strategy of selling the firm to either their employees or managers. The last column of Table 1, is the same data but limited to Indiana All Firms for each of the exit strategies for comparison purposes. As identified, Indiana tracks consistently with the US data – but it is interesting to note that the response concerning selling the business to employees or managers is above the national average at 8.6% (Table 1).
Table 1: Exit Strategies from 2016 ASE Data
| Exit Strategy 6 | All Firms 1 | Non-Minority Owners 2 | Minority Owners 3 | Black or African American Owners 4 | Indiana All Firms 5 |
| Walk away | 14.2% | 14.7% | 13.3% | 16.0% | 12.5% |
| Liquidate assets and repay liabilities | 14.1% | 12.1% | 12.5% | 13.2% | 11.8% |
| Sell the business to employees or managers | 8.1% | 8.5% | 6.7% | 6.3% | 8.6% |
| Sell/merge with another firm | 12.6% | 13.0% | 10.9% | 11.8% | 11.4% |
| Sell to a stranger | 20.7% | 21.1% | 20.2% | 20.0% | 19.5% |
| Sell/transfer to another owner | 12.5% | 12.2% | 14.2% | 11.0% | 12.1% |
| Sell/transfer to family member | 10.6% | 11.2% | 9.0% | 12.4% | 12.4% |
| IPO | 0.5% | 0.4% | 1.0% | 0.9% | 0.4% |
| No current Exit Strategy | 31.2% | 29.5% | 36.1% | 32.0% | 31.5% |
U.S. Census Bureau. (2018, August 10). Statistics for U.S. Employer Firms by Exit Strategies by Sector, Gender, Ethnicity, Race, Veteran Status, and Years in Business for the U.S., States, and Top 50 MSAs: 2016 Retrieved from https://www.census.gov/data/tables/2016/econ/ase/2016-ase-characteristics-of-businesses.html
Note 1: There were 3,484,939 total reporting firms in the 2016 ASE.
Note 2: There were 2,751,643 total reporting firms owned by Non-Minorities in the 2016 ASE
Note 3: There were 589,689 total reporting firms owned by Minorities in the 2016 ASE.
Note 4: There were 61,756 total reporting firms owned by Black/African Americans in the 2016 ASE.
Note 5: There were 67,897 total reporting firms from Indiana in the 2016 ASE.
Note 6: Detail may not add to total due to rounding or because a Hispanic firm may be of any race. Moreover, each owner had the option of selecting more than one race and therefore is included in each race selected. Respondent firms include all firms that responded to the characteristic(s) tabulated in this data set and reported gender, ethnicity, race, or veteran status or that were publicly held or not classifiable by gender, ethnicity, race, or veteran status.
Are you an Indiana business owner? Are you starting to evaluate exit strategies? Are you thinking / concerned about what will happen to your business, your employees, your community when it is time to retire and step down? If you are one of the 8.6% of Indiana businesses considering sale of your business to your employees; or one of the 31.5% of Indiana businesses that have no current exit strategy – contact the Indiana Center for Employee Ownership – let’s start that conversation now.