Over the next five years, it’s projected over 60% of family businesses will transfer ownership to the next generation.
The transportation industry is comprised of family businesses facing those tough decisions daily — wondering when the right time is to transition the business and to who. Combine that with the fact the transportation industry has been fighting a freight recession for the last 18-24 months, where the industry has seen a lot of companies go out of business.
With owners under stress to maybe just break even and maintain cash flow, they likely have pushed off thinking about transitioning the business to the next generation. But for owners looking to transition ownership to the generation, now may be a great time to do it.
Why now is a good time for transportation owners to consider business transition
Given the economic downturn the transportation has been in, it’s very likely valuation for transportation companies is probably lower today than it’s been in the last 5-10 years. With the federal estate limits possibly reverting to an estimated $7 million per person at the end of 2025, now may be a very beneficial time to transition a large portion of the company to the next generation.
Given valuations for most companies are likely lower than they may be once the industry comes out of this recession, owners can transition a higher percentage of the company to the next generation than they could in the future for the same value. That coupled with the fact the federal lifetime exemption limits for estates may be cut roughly in half in the next 12 months, now may be a great time to transition to the next generation, whether it’s done with a gift or a sale.
Learn more about business transition options for transportation
Review estate planning options from CLA’s tax team, including options using family limited partnership and a variety of trusts.
How CLA can help with business transition in transportation
Our transportation team is well versed in estate planning and succession. Reach out to get started on a personalized plan for your company and family.
This blog contains general information and does not constitute the rendering of legal, accounting, investment, tax, or other professional services. Consult with your advisors regarding the applicability of this content to your specific circumstances.
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