<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=275610486160139&amp;ev=PageView&amp;noscript=1">
CLIENT LOGIN
802.846.1264
South Burlington, VT

Value Creation Blog

5 Things Your Clients Need to Know for Exit Planning

If you are an advisor and work with business owners and have Clients who are over fifty yearsBusiness Exit Planning old, they are thinking about how they will leave their business.  When asked about their time frame for an exit, they will usually say they want to leave their business in five years.  If you come back and ask them three years later, they will still say five years.

I call this phenomena “perma-five”.  Business owners live in perma-five because they know there are things they need to deal with in their business but haven’t come up with a strategy or an understanding of what those things are.

I find there are five areas that business owners need to focus on if they ever want to change their relationship to their business and leave perma-five.  These areas are:

Understanding what they need financially.

Business owners can’t often sell their business and ride off into the sunset.  Once a business is sold, the ending capital will provide less than 20% of the income the owner had before they sold their business.  A financial plan showing this change in income is crucial in the planning process.

Knowing what the business is worth

In many instances the owner of the business will think the business is worth three to five times it’s real value.  If we help our owner Clients understand how buyers value businesses we can help them understand the importance of owning the real estate they operate their business in and why maximizing their qualified plan contributions is important.

Understanding the value drivers of their business

Most business owners are stuck in the tactical details of their company.  Helping them more to operational irrelevance in their business will allow them to start acting strategically in their business.  Certain strategic actions can add a tremendous amount of value and cash flow to the business.  Helping owners understand what those strategic actions are is very important.

Know who the business will be transferred to

In most instances an internal buyout or a move to a passive ownership strategy is the most advantageous for our private business Clients.  Understanding how both of these strategies works can provide real value for our Clients.

Keeping their key people

The concept of working with a “stay bonus” is important for having key people stay with our Client’s company.  Whether there is a third party sale or a passive ownership strategy pursued, having key people in place is crucial if one is to have a successful transfer strategy.

Helping our Clients move from “perma-five” to a real strategy for building value that allows them to change their relationship to their business is a key in working with private business owners in a wealth management relationship.  Having an understanding of the five topics above can go a long ways towards becoming the most trusted advisor for our business owner Clients.

Continue Reading

Topics: business relationship management, business exit planning, for advisors, Exit planning for advisors


Thoughts On The Valuation Of Wealth Management Firms

Valuation of Wealth Management FirmsI’ve been having some thoughts about things that you should consider if you want to move your wealth management firm towards one that has real value to an outside buyer.  Remember, outside buyers are interested in having a significant, increasing, and ongoing revenue stream. 

They are not especially interested in buying a business that depends on your skills at working with Clients, managing money, or having specialized knowledge.  It’s not that these things aren’t valuable; it’s just not very valuable to a buyer of your firm.

A potential buyer of your firm will love an ensemble practice that really is an ensemble.  If you’re running a solo firm or a group solo practice buyers are not going to love your firm or pay you big money for it.  If you can find some way to change your firm to an ensemble practice the enterprise value of the firm will dramatically improve.

Continue Reading

Topics: wealth management, enterprise value, business exit planning, Exit planning for advisors


Five Things That Help Advisors About Exit Planning

exit planning for advisors

Continue Reading

Topics: enterprise value, business exit planning, for advisors, Exit planning for advisors


Valuation and Wealth Management Firms

business valuation sidebar resized 600I’ve recently been doing some work on determining financial value for financial planning/investment management firms.  These are the firms who develop significant cash flow based on a percentage of assets under management.

One of the firms we are working with is being courted by a consolidator who is rolling up investment management firms.  They are paying ten times free cash flow on closing and fourteen times free cash flow in the future based on certain performance metrics being met.

Continue Reading

Topics: exit planning, business exit planning, Valuation, valuation for wealth management firms, Exit planning for advisors


Exit Planning Needs To Be Part Of A Wealth Management Process

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.

Continue Reading

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


Building A Business To Sell Gives You Options – Exit Planning

Continue Reading

Topics: exit planning, business exit planning, Exit planning for advisors, Exit planning for advisors, exit strategy business plan, exit readiness


Business Exit Planning.....Perma-five and How to Avoid It

Continue Reading

Topics: for business owners, business exit planning, for advisors, Exit planning for advisors, exit readiness, perma-five


It’s Not About Exit Planning, It’s About Life Cycle Planning

business exit planningI was recently at a financial planning conference where the subject of succession planning came up consistently.  It seemed that many of the presenters were absolutely obsessed on the subject of succession planning.  More than a few presenters were “appalled” that most financial advisors who were over fifty years old did not have a formal exit plan for their business.  LIttle do these presenters know that there are very few business owners who are over fifty who have an exit plan.

The reason for this is for many business owners having an exit plan is not the most important thing in their lives.  Baby Boomers are not going to retire at 55 years old, or for that matter 65 either.  They will most likely fade off into the sunset and only retire when their business is no longer meaningful.  Because of this, I’m not surprised that most business owners haven’t thought about exit planning in a formal manner.

Continue Reading

Topics: financial planning, enterprise value, business exit planning, Exit planning for advisors


5 Reasons You Might Be Burned Out – Unique Ability

unique abilityOften a business owner will walk into our office and tell me that they want to leave their business.  When I ask when, the answer is often “yesterday”.  When I hear this answer I am reasonably sure I’m facing a case of owner burnout.

Continue Reading

Topics: business exit planning, unique ability, Exit planning for advisors, exit readiness


My Pet Peeves Around Business Exit Planning

business exit planningI’ve had an interesting experience in the last couple of days.  I had entries deleted from a group on Linked In and had another group manager calling me wanting to know that if I wrote a white paper that I’m giving away from our site and is available by clicking on the link at the bottom of this post.

Continue Reading

Topics: value creation, business exit planning, for advisors, Exit planning for advisors


Subscribe to Our Blog

Subscribe to Our Blog

Most Recent