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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.

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


Working With Business Owners – You Need To Know About Qualified Plans

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Topics: financial independence planning, for advisors, qualified plans


Working With Business Owners – Understanding Medical Plan Options

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Topics: for business owners, for advisors, private business owners, medical insurance


How Advisors Can Help With Exit Planning

exit planning Business owners who are over fifty years old are often interested to learn about options they have for leaving their business.  They often want to know what steps they should take and to learn what the best steps are for them to take.

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Topics: exit planning, business exit planning, for advisors, leaving your business


Five Things That Help Advisors About Exit Planning

exit planning for advisors

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


5 Ways To Improve Your Communication Skills

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Topics: for business owners, communication, for advisors, communication skills


Collaboration, Cooperation and Coercion

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Topics: for business owners, business relationship management, for advisors, private business owners, collaboration with clients


Why The Business Owner Trusted Advisor Isn’t Who You Think It Is

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Topics: value creation, business relationship management, for advisors, collaboration


Referrals Are All About Context - Enterprise Value

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Topics: for business owners, business relationship management, enterprise value, for advisors, Customer Service


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

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


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