Who and What Your Advisors Should Know


At some point, you will need to transition out of (exit) your business. In order to maximize the value of your business during the sale process, it’s helpful to have a deal team that has the qualities, experience, and training necessary to help you make that transition successfully.

See the following important characteristics that you should look for in the members of your advisor team below.

Understanding of the Exit Planning Process. Each member must have an understanding of all of the phases and complexities of the Exit Planning Process.

Access to Other Professionals. Since it’s unlikely you know all of the necessary professionals you will need for the transition, ideally, the advisors you work with will have access to experienced professionals who are versed in exit planning and know how to integrate everyone. (i.e., M&A Attorney, CPA, financial and wealth planners, banker, estate planner, exit planning specialist, etc.)

Financial Knowledge. Someone on your advisor team must be able to determine:

  • Your income retirement needs as of your anticipated departure date
  • To what extent those needs are likely to be met by non-business assets
  • What amount you must receive from the transfer of your business to make up any shortfall.

This analysis should take into account various assumptions about inflation, rate of investment return, your life expectancy, etc.

Valuation Knowledge. Your team must include someone who understands all of the factors that comprise business value and understand what your business is worth from the point of view of prospective buyers in the marketplace. In certain cases, you may require an appraiser to undertake a certified business valuation.

Key Employee Retention. At least one member of your team must understand how finding, training, motivating, and keeping key employees is critical to the success of your exit. This advisor should be able to design impactful incentive plans since retaining or losing key employees can impact the value of the business. We have worked with many owners on this phase by brainstorming specific incentive planning ideas such as non-qualified deferred compensation plans, and stock bonuses or purchase plans, and many more.

Business Continuity Knowledge. Look for an advisor who knows how to design and implement business continuity strategies for your type of company whether it’s for a single owner or multi-owner. For a solely-owned business, this may include a stay-bonus plan. For a co-owned business, the advisor should know how to design a buy/sell agreement. The owner’s continuity and transition wishes in event of a lifetime transfer are vital to a consistent exit plan meeting all of the owner’s objectives.

Knowledge of Business Owners’ Estate Planning Needs. Many owners have some type of estate plan and often these plans lump business ownership with all other assets. It’s important to identify if an owner wants the business to be transferred to the same beneficiaries as those who should receive other estate assets. In order for your advisors to develop consistency between your exit plan and your estate plan, they must be clear on lifetime goals and objectives.

Investment Advisory Services. If orchestrated according to plan, your exit will result in a liquidity event. It’s important to have a plan for the cash you receive from your sale. An investment advisor can help you invest your proceeds in strategies and plans for protection and continual growth.

Comprehensive Exit Planning. It’s crucial to have an advisor who will create a written exit plan and action item checklist for you. The work necessary to help achieve a satisfactory exit must be undertaken in a systematic way based on a written plan and a written, accountability checklist. A written exit plan is based upon your goals and objectives so it provides a road map that can be understood and followed by all of the members of your advisor team.

You want a quarterback in your exit planning process, we can help you assemble a team that, among all its members, possesses all of the characteristics listed to help maximize the value of your sale. We’d be happy to sit down and talk with you anytime. Please feel free to contact us at your convenience.

Material discussed in this communication is provided by Business Enterprise Institute, Inc. Advisory services offered through Commonwealth Financial Network®, a Registered Investment Adviser. Financial and exit planning services offered through Alliance Private Wealth LLC are separate and unrelated to Commonwealth.