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Extend Your Exit Planning Reach With Your Advisor Network

Submitted by John Brown on Sun, 12/18/2016 - 8:00pm
Conference meeting with advisors

As Exit Planners, we are often on the receiving end of “What should I do?” conversations that start with one of the following statements:

“I’m thinking I’d like to transfer my business to my three key employees, but when I asked my CPA what she thought about it, she said, ‘That’s the worst idea I’ve ever heard!’”

“I talked to my attorney about using an ESOP to sell my business, but he told me that ESOPs were too complicated and expensive, and usually collapsed.”

“My kids would like me to transfer the family business to them, but the advisors I’ve spoken with tell horror stories about the family blowups and business meltdowns they’ve experienced or heard about.”

We all have opinions about the perils and benefits of various Exit Paths, and few of us hesitate to share them—especially when owners ask! After all, it’s what we’re paid to do. However, opinions too often rely on too little experience with each type of transfer (e.g., third-party sales, sales to ESOPs, family transfers, and sales to management or co-owners) to be considered informed recommendations. Without both experience and the level of technical mastery necessary to suggest modifications and alternative approaches that can maximize the benefits and minimize the disadvantages inherent in each Exit Path for a particular owner and/or business, most advisors are simply not in a position to properly answer clients who ask “What should I do?”

In reality, advisors who are fully competent in their professions lack the knowledge and experience of experts in other disciplines that directly affect the planning, design, and implementation of the various transfer options. Advisors who pretend that they know all and have seen it all do a disservice (at best) to owners when they share their opinions about a particular Exit Path.

Real knowledge is to know the extent of one’s ignorance. –Confucius

Contrast those advisors to those trained and experienced in Exit Planning. When owners ask them, “What should I do?” they respond, “I don’t know. May I first ask you some questions before answering yours?” These advisors also lack the detailed knowledge of all of the technical issues that directly affect the planning, design, and implementation of every transfer option, but rather than recommend or reject a particular approach, they ask what owners want and need their business exits to accomplish.

Exit Planning Advisors know that they don’t and never will have the deep knowledge and experience needed to foresee and meet all of the challenges and maximize all of the benefits present in every individual owner’s chosen Exit Path. Instead, trained Exit Planning Advisors assemble networks of subject-matter experts to act as think tanks, sounding boards, and potential members of various clients’ Exit Planning teams. For example, their advisor networks typically include the following:

  • For owners using the ESOP Exit Path:
    • An ESOP-feasibility consultant.
    • A valuation firm well-experienced in ESOP valuations.
    • Perhaps an ESOP attorney.
  • For owners selling to third parties:
    • A mergers-and-acquisitions attorney.
    • A CPA audit firm.
    • An investment banker or business broker.
  • For owners who want to keep their businesses in the family:
    • CPAs and attorneys whose professional practices concentrate on family businesses.
    • A family-business consultant.
  • For owners pursuing a sale to management teams or co-owners:
    • CPAs, business attorneys, and estate planners who have substantial experience with these transfers.
    • A BEI-trained Exit Planning Advisor. These Advisors have specialized training and design tools available to them that are unique to this Exit Path.

Advisors who assemble and use these advisor networks are far better positioned to offer well-informed counsel to owners about which Exit Path best suits their goals for their businesses, themselves, their families, and sometimes, their employees and communities. Advisors with advisor networks do not discard or embrace a particular Exit Path based on their knowledge and experience alone. They rely on their networks, which often include one or more of an owner’s existing advisors, to offer expertise in all aspects of Exit Planning.

Not surprisingly, owners understand the value of expert advisor networks. Once exposed to how they work, owners realize that using a planning process that involves advisors who are experts in their fields gives them access to the most accurate information and best-fitting recommendations from the most experienced and well-informed professionals. They appreciate that the entire process is focused on their goals and aspirations rather than on the agendas, preferences, or biases of one advisor.

“What should I do?”

When helping owners decide on the best Exit Path for them, it is essential to access the talent and experience of top-level specialists in all aspects of Exit Planning design and implementation. Advisor networks are the best way to both extend your Exit Planning reach to matters outside your professional expertise and offer the best possible answer to “What should I do?”

If you are ready to continue the “What should I do?” conversation, BEI has created tools and processes to help you create your own advisor network.

If you’d like more information about how to use your advisor network to extend your Exit Planning reach, please contact us today.