Building Your Exit Planning Advisor Team

Mon, 05/09/2016 - 05:00


More business owners have begun thinking about or transitioning out of their businesses than ever before. Most advisors want to help, and owners need their help, but the Exit Planning Advisor knows that a successful exit requires more than a two-person team. Exit Planning Advisors must form a next-level Advisor Team, but whom do they recruit? Which qualities, experience, and training are Exit Planning Advisors looking for?

We believe that there are three broad categories to consider: personality traits, experience, and an understanding of the Exit Planning Process.

Personality Traits

  • Team Player. Advisor Team members don't have to agree with all of the Recommendations the team makes, but they do need to be willing to work together to create a plan that achieves all of the business owner’s goals and aspirations. The owner’s goals, not the advisor’s personal interests, drive the planning and recommendations.
  • Responsive. An important element of every Exit Plan is the timeline that all parties agree to for plan implementation. A single laggard advisor can hold up the entire planning process for weeks or months. Advisors who fail to meet deadlines are subject to speedy replacement.


Look for the most capable, experienced advisors in their respective professions. Specifically, the Exit Planning Advisor looks for advisors who work with business owners on a wide variety of issues daily.

Understanding of the Exit Planning Process

Each advisor on the Advisor Team must understand and support the comprehensive Exit Planning Process. If they aren't familiar with it, they must be willing to learn about it. The Exit Plan (or road map) that the Exit Planning Advisor creates is one that all members of the Advisor Team will follow.

Exit Planning Issues and Appropriate Advisors

Let’s look at the types of advisors Exit Planning Advisors recruit for the many issues included in a comprehensive Exit Plan.

  • Issue 1: Professional Determinations. Exit Planning is founded on a professionally accurate determination of the following:
    • A business owner’s income needs starting on the anticipated departure date.
    • How likely it is that the owner's non-business assets will meet their post-exit income needs.
    • How much money the owner must receive from selling or transferring the business to cover the gap between what they have and what they need.

This determination should account for various assumptions about inflation, rate of investment return, life expectancy, and so on.

Possible Advisors: Financial planner, business valuation advisor.

  • Issue 2: Key-Employee Retention. At least one member of the Advisor Team must understand how critical finding, training, motivating, and keeping key employees is to the success of the owner's exit. This advisor should be able to design an incentive plan (either ownership- or cash-based) that can increase the value of the business while it handcuffs key employees to the business long term.

Possible Advisors: Business attorney, financial-services professional, compensation expert.

  • Issue 3: Management Capability and Effectiveness. There may be a need to evaluate and train existing management or find replacement management.

Possible Advisors: Business consultant, succession planner.

  • Issue 4: Business Growth. One team member must be capable of accurately assessing a company’s current business practices to create growth plans that include necessary operational, marketing, and administrative changes and improvements.

Possible Advisors: CPAs or consultants with expertise in marketing, operations, strategic planning, or industry specialization.

  • Issue 5: Protection of Business Value. There is often a need to reassess property and casualty insurance and create restrictive agreements with key employees to protect the business from the loss of employees, customers, vendors, and confidential information.

Possible Advisors: P&C insurance specialist, business attorney.

  • Issue 6: Ownership and Transition Tax Minimization.

Possible Advisors: CPA, tax specialist, pension-plan specialist, business attorney.

  • Issue 7: Exit Path Planning and Execution. If a plan design involves transferring a business to insiders, the Advisor Team must include a certified (i.e., acceptable to the IRS and others) valuation expert who understands the benefits of using a low-value ownership interest. Business brokers and investment bankers supply similar information when owners choose a third-party sale as their Exit Path. They estimate a likely sale price for the owner’s business.

Depending on which path an owner chooses, in addition to the advisors listed above, the Exit Planning Advisor may also have to recruit an ESOP consultant, SBA specialist, commercial loan officer, family-business consultant, and/or post-integration specialists and tax counsel.

Possible Advisors: Credentialed business appraiser, business broker, investment banker.

  • Issue 8: Business Continuity. As part of an Exit Plan, the Exit Planning Advisor must create contingency plans should the owner die or become incapacitated prior to the planned exit. This may involve the creation of Buy-Sell Agreements.

Possible Advisors: Estate planning attorney, business attorney, and life insurance professional.

  • Issue 9: Business Owner’s Estate Plan. To coordinate a business owner’s Exit Plan with his or her estate plan, advisors must recognize that the owner’s lifetime goals and objectives (e.g., who the owner's successor will be and how much the successor is to pay for that ownership) are often the same.

Possible Advisors: Estate planning attorney, business attorney, life insurance advisor, trust department.

  • Issue 10: Post-Exit Asset Investment. Most exits result in cash that now-former owners need to invest prudently and in accordance with their objectives. The same person who helps determine an owner’s financial needs and objectives upon an exit (probably already part of the team) is usually well suited to advise an owner on the investments of those proceeds.

Possible Advisors: Financial advisor.

The list above is not comprehensive, and Exit Planning Advisors add to it over time. The point is that these advisors will look to the Exit Planning Advisor as the facilitator and possessor of Exit Planning expertise. Advisors who surround themselves with expert advisors also surround themselves with expert referral sources.