A Deloitte Private survey of private company leaders revealed that nearly 6 in 10 (57%) respondents from organizations planning a future transfer or sale anticipate their company will engage in a transaction in the next one to three years. Business continuity (40%) is cited as the dominant driver for pursuing a sale or transfer, outpacing liquidity for the business (22%) or for business owners (13%). Those seeking to sell all or part of the organization are motivated by scaling for growth via partnerships (45%) or financial sponsors who can support future expansion (37%).

The study, "Private Company Outlook: Market Readiness," surveyed 100 private company leaders from organizations planning a future transfer or sale to understand their perspectives around planning, timing, readiness and objectives related to a transaction.

Key findings:

• Transaction timing hinges on external conditions and internal readiness: 50% of respondents said market conditions will drive transaction timing, while 43% highlighted organizational readiness. Although 63% have recently obtained a valuation, just half of those planning a sale in the next one to five years indicate that their organization is prepared for due diligence — including engaging third-party advisors.

• Tax implications are key considerations in going to market: Nearly 9 in 10 leaders consider recognized gains (88%) and transfer taxes (87%) as high or very high concerns while two-thirds (66%) cited historical tax issues as concerns. Leveraging existing losses (43%) and qualified opportunity zones (36%) were the most referenced tax planning considerations in the event of a sale. 

• Compensation structure expectations depend on company size: More than 4 in 10 (43%) respondents expect a cash plus earnout arrangement for sale proceeds. Leaders from companies with annual revenues of $500 million or more are over three times as likely as those from smaller organizations to expect proceeds to include both a sale and a rollover.

• Plans for post-sale engagement and managing sales proceeds vary widely: Half (50%) of respondents said their organization's founder or owner intends to join the board post-transfer or sale. Those from companies with under $500 million in revenue were nearly three times more likely to expect the founder's full exit (35%, vs. 13% at larger companies). For managing the after-tax proceeds, 48% already have trusts with ownership interests for estate planning, and 37% plan to roll equity into a new entity, if permitted.

"As these private company leaders increasingly look to transactions as a pathway to business continuity and growth, they are approaching each decision with careful consideration — closely evaluating market conditions, organizational readiness, and tax implications," said Wolfe Tone, U.S. Deloitte Private leader. "Whether pursuing a full or partial sale in the years ahead, their priorities seem clear: managing transitions to safeguard stability, fuel expansion, and create lasting value for owners and other stakeholders alike."