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Drafting an Advisor Dream Team

Submitted by John Brown on Tue, 09/12/2017 - 6:00pm
Two men and two women collectively fist bumping over a table with various jars and bowls.

Over the course of the past several posts, we’ve watched business owners Michael and Sharon Drake wrestle with a pressing and all-too-common problem: They were ready to exit their business, but their business was not ready to be exited.

After learning about their goals and resources, the Drakes’ financial planner and Exit Planning Advisor, Giselle, showed the Drakes that their resources fell several millions of dollars short of what they needed to exit successfully.

The Drakes were crestfallen not only by their resource shortfall but also because they did not know how to close the gap. After all, if they had known how to quickly grow their business and financial resources, they would already have done so.

The Drakes justifiably wondered whether Giselle had the skills necessary to perform the tasks she had proposed. Those tasks included:

  • Closing the value/cash flow gap.
  • Reducing business risk.
  • Minimizing taxation on sale proceeds.
  • Selecting the Exit Path best suited to meet their goals (e.g., sale to management or a third party).
  • Designing and implementing the business sale/transfer.
  • Providing for the business’ continuity and the Drakes’ family should Michael, the person most active in the business, die before his planned exit.

Giselle, Master of One

Giselle was neither a jack-of-all-trades nor an expert in all of these tasks, but before we look at how she responded, take a moment to ask yourself, “What would I say and do if the Drakes were my prospective or existing clients?” Do you have the skills and experience necessary to successfully undertake all of these tasks? (If not, fear not: Most advisors are in the same boat as you.)

Several years earlier, Giselle had added Exit Planning to her skills toolbox. As part of her Exit Planning training, Giselle:

  1. Was well versed in a proven Exit Planning Process, specifically, The BEI Seven Step Exit Planning Process™.
  2. Had access to a variety of tools, including EPIC, BEI’s project management software that facilitates the creation of written Exit Plans (the topic of next week’s article).

Having a process and software put Giselle well ahead of her competitors, but she needed one more tool that all successful Exit Planners rely on: An advisor network that included professionals skilled in the areas her clients might require.

To learn a process, Giselle attended a BEI Boot Camp and took advantage of ongoing training. To access the planning tools, Giselle joined BEI. But how did she assemble a network of advisors that she could trust with the most important financial event of her clients’ lives?

Further, which advisors did she recruit? How did she qualify them? How, and how much, would each advisor charge her clients? How would she coordinate these advisors to eliminate duplication, delay, and possible conflict?

Without answers to these questions, an Exit Planning Process that required multiple advisors could turn into a real mess for both Giselle and her clients.

After Giselle completed her Exit Planning training, she drafted a checklist of professionals she might involve in her process. Not all advisors are involved in every Exit Plan, nor was Giselle’s list comprehensive, but she considered many of the following:

  • CPA
  • Financial planner
  • Business appraiser
  • Business attorney
  • Mergers & acquisitions attorney
  • Estate-planning attorney
  • Insurance advisor
  • Business consultant(s)
  • Actuary/third-party plan administrator
  • Investment banker
  • Business broker
  • Income tax specialist
  • Banker with SBA and acquisition-financing capability
  • ESOP feasibility consultant (other ESOP specialists)

Beyond the List

Compiling a list is not difficult, but managing the following near-universal concerns can be.

  1. How do you find and work with the best advisors?
  2. How do you reach out to advisors to encourage their participation?

How Do You Find and Work With the Best Advisors?

Consider all of the types of advisors various Exit Paths might require. Make a list like Giselle did. Remember that it’s unlikely that you have worked with all of the various advisors your Exit Planning clients will need.

Identify the best advisors in your community in the various professions, because using them is a vital element in the creation of world-class Exit Plans. The best identification method is to ask advisors you trust whom they consider the best in fields other than their own.

For example, Giselle had never worked with a business consultant who specialized in management development, so she asked several CPAs with whom she had worked for recommendations and introductions. She contacted those advisors, and scheduled meetings to discuss the Exit Planning Process she used and their roles in plan creation and implementation. She was also careful to discuss their billing practices and fees.

How Do You Reach Out to Advisors to Encourage Their Participation?

During her introductory meetings, Giselle described:

  • Her role as the Exit Planning Advisor.
  • The roles of other specialist advisors.
  • How she facilitated their involvement using a project-management tool (BEI’s EPIC software platform).
  • How she incorporated and coordinated advisor recommendations into each client’s written Exit Plan.
  • How the team would work, over time, to implement those recommendations.

We’ll explore this planning process, as Giselle coordinated and facilitated it, in more detail in our next article.

Finally, Giselle asked all prospective members of her advisor network whether they would be available to offer planning suggestions and advice on an informal, non-billable basis when she could not include them in representing an owner/client.

Access is a valuable attribute of the advisors you recruit. When determining a client’s best options and making recommendations, you will need to informally share ideas and concepts with a wide variety of professionals.

Quarterbacking a Team

Once you recruit best-in-class advisors, you will coordinate their recommendations, facilitate communication, and efficiently move the Exit Planning Process forward.

In Giselle’s case, the advisors on her informal team agreed to serve as sounding boards for her questions and concerns pertaining to issues or situations relevant to their professions. Each advisor recognized the opportunity to be retained by Giselle’s Exit Planning clients.

Championship Exit Plans

The best Exit Plans are:

  • Designed and implemented by the best-available advisors from a variety of disciplines.
  • Quarterbacked by skilled Exit Planning Advisors who understand the process of exiting.
  • The products of a comprehensive system that coordinates, streamlines, and implements the Exit Plans’ recommendations.

This combination of advisors, process, and system is the surest, most time- and cost-effective way to achieve all of an owner’s exit goals and aspirations.

In our next article, we’ll learn how Giselle involved her team throughout the Exit Planning Process.


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