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Value Creation Blog

Exit Planning Needs To Be Part Of A Wealth Management Process

Posted by Victoria Gehlmeyer

wealth managementI’ve been part of the exit-planning world for over fifteen years.  I keep seeing those who practice exit-planning act like it’s a discrete process that should be done for those who want to leave their business.

I believe that exit planning is just one of the many areas that comprise comprehensive wealth management for owners of private businesses.  Because the overarching activity is wealth management, an exit plan by itself is usually not necessary.

What is necessary is an educational process that covers ways an owner can leave their business.  Depending on the size and type of the business, the industry it’s in and the owners wishes will dictate what type of business exit makes sense.

I believe wealth management should start out with what and why.  Before we get involved in any of the specifics of wealth management, we first need to understand what the client is trying to accomplish and why they want to do this. 

Exit planning is part of the wealth management process but it might not be very high on the list of the business owner’s issues.  We need to respect what our customers want to accomplish and if exit planning is not a priority, let’s not try to make it one.

In many cases financial planning should be a starting place in exit planning.  If the owner wants to work on strategies they could use to leave their business, it makes sense to me that we first need to figure out what it takes on a financial basis for this to happen. 

I’ve noticed that many owners develop a perma-five attitude about leaving their business.  They continually say their exit will occur five years from now.  Owners often don’t get serious until they understand the real financial ramifications of leaving their business.

Sometimes our role is to be dream-buster.  Business owners often think about selling out, getting big bucks and riding off into the sunset.  My experience is this rarely happens.  Most business owners will need to understand their business should only be part of their asset base. 

Those who haven’t taken those steps will have a good chance of having broken dreams.  If we had done good financial planning, we might have been able to teach our clients that there is a financial problem with the plan they have.

I’m a big fan of exit planning.  I’m not a fan of using exit planning as a strategy to get people to sell their business.  Exit planning should be a part of a whole.  Those who do this serve their clients and customers in a more complete manner.

Josh Patrick

Access your free Exit Planning Assessment.  This process provides a coaching call on eighteen key areas a buyer would look at in your business.  You will have a call with no charge as well as a report that outlines a projected value of your business, the gap you could fill and strong and weak parts of your business.  Click on the button below to start the Exit Planning Assessment process.

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Securities and Investment Advisory Services offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Stage 2 Planning Partners and NFPSI are not affiliated.

This article is published for residents of the United States only.  Registered Representatives and Investment Adviser Representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered.  Therefore, a response to a request for information may be delayed.  Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed.

 

Topics: wealth management, exit planning, business exit planning, wealth, Exit planning for advisors, exit readiness

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