Talk about a golden opportunity for financial advisors: An estimated 3 million business owners are expected to sell their companies in the next five years. And they’re going to need plenty of help — before, during and after the sale.

And a majority of those owners haven’t done any financial planning, exit planning specialists say.

“Financial planners and advisors really are well-positioned,” says Christopher Snider, CEO of the Exit Planning Institute, which certifies advisors to become exit planners. “They should help owners start the process, they should be the quarterback for the team that the owner needs to assemble and they should be the point person for the liquidity event after the sale.”

Indeed, expertise in helping owners sell their business and make the transition to a new lifestyle can reap multiple benefits for advisors and wealth managers. Among them are differentiation from competitors, deeper client relationships, a more secure role as trusted advisor and a unique vantage point to identify a client’s other financial needs.

Exit planning also offers business development advantages, such as the opportunity to interact with other influential professionals and a chance to showcase skills to business associates, family members and heirs. Planners may also be well positioned to become the owner’s primary advisor after wealth from the business has been converted to liquid assets.

Michael Montgomery, managing director at CTC Consulting/Harris myCFO, says his own firm’s ability to provide substantial transaction planning services to owners selling their firms “has greatly assisted our overall business by positioning us as a thought leader and premier advisor, and has provided us with a competitive advantage.”


At Cincinnati-based Lenox Wealth Management, chairman John Lame became a certified exit planning advisor last year. Not only does he expect the expertise will bring in new business, he says, but the training has also “helped me give better advice to families who own businesses, where the owner is in their mid to late 50s or older — as well as think about and plan for succession at Lenox.”

The institute’s five-day certification program, which costs about $4,000, is now taught twice a year at the University of Chicago’s Booth School of Business, but will also be expanded to other locations around the country, Snider says.

Demand for the expertise is growing rapidly, John Brown, chief executive of the Business Enterprise Institute, told financial planners at the FPA’s annual national conference in Orlando last year. “The need for exit planning is becoming very pronounced, very quickly,” Brown said. “Owners need a plan, and there is increasing awareness that financial planners can provide one.”

Yet advisors face considerable hurdles. For starters, when business owners surveyed by the Exit Planning Institute last year were asked who was their most trusted advisor, financial advisors ranked only fourth — behind accountants, spouses and attorneys.

“That’s a big problem,” Snider says. “Advisors have to get in front of business owners and let them know what they have to do. [Planners] are not top of mind right now.”

And the clock is ticking, particularly for boomer entrepreneurs. “A good business exit plan can easily take five to 10 years,” Brown told planners.

“Owners don’t appreciate how difficult it is to sell a business,” Snider adds. “They equate it to selling a house and it’s way more difficult.”


Indeed, getting owners to focus on the intricacies of selling a business (and the implications for their personal finances) is one of the biggest challenges for wealth managers, Montgomery says. “Many sellers are more fixated on getting the deal itself completed,” he says, “with wealth planning taking a back or secondary seat.”

Getting invited to the party is another challenge for advisors. Other professionals involved in the transaction “are often reluctant to allow wealth advisors in for fear of taking focus off the transaction’s trajectory,” he adds.

And owners themselves may be reluctant to bring on wealth advisors because they’re overwhelmed by fees they’re already paying to lawyers, accountants, investment bankers, lenders, etc. But advisors with exit planning expertise can offer benefits that overcome owner resistance.

“The most common mistakes business owners make when selling is 'ready, fire, aim,’?” Montgomery says. “Advisors must help them take a breath and think things through.”

Advisors can also help sellers make informed decisions to maximize the value of their business and then optimize their wealth after the sale with coordinated investment, tax, philanthropy, estate and gift planning.

“The biggest mistake most business owners make before a sale is no advance planning,” says Los Angeles investment banker Alexander Kasdan, who works with family-owned businesses. “There’s certainly an opportunity for someone who can provide that service.” 



1. Have a candid discussion about the business.

Address fundamentals first, the Exit Planning Institute recommends. Ask the business owner what the business is worth today and how it compares to its competitors. “It’s also critical to know: Is the business building value or simply sustaining a lifestyle?” says Christopher Snider, chief executive of the institute.

2. Understand a client’s financial requirements.

Advisors should identify the owner’s exit objectives and prepare a financial and retirement needs analysis, says John Brown, CEO of the Business Enterprise Institute. Consider issues such as health and long-term care coverage and construct a financial plan.

3. Construct a dry-run analysis.

Help clients envision what their life will be like after the sale, and what their corresponding financial needs will be. “When the company goes away, life is very different,” says Michael Montgomery, managing director at CTC Consulting/Harris myCFO. “Many expenses that the company paid become expenses the client must pay.”

Include financial profiles for before and after the sale. For example, a wealthy business owner may have a personal residence, concentrated equity ownership in the company, real estate leased to the company and cash flow derived from wages, company distributions and distribution of rents received from real estate. But after a sale, the former owner may purchase an additional residence or vacation home, have a liquid portfolio and real estate that is retained and leased to the acquirer of the business.

“The question for the client is: Will they have enough to meet their lifestyle maintenance goals?” Montgomery says. “If no, what do they have to do?”

4. Help nail down company leadership, board governance and succession planning.

“Owners selling their business need to understand the importance of having credible leadership in place during the transition and after they’re gone,” says John Lame, chairman of Lenox Wealth Management. “They need to be involved with making sure the new leader not only is a good manager but shares the same values as the founders and cares about the company’s clients and customers.”

Founding owners often neglect governance and a board of directors, Lame says. “Many founders never had a legitimate board and don’t realize that having one is important to a buyer,” he says. “They need someone to come in and tell them what good governance looks like.”

Charles Paikert is a senior editor of Financial Planning. Follow him on Twitter at @paikert.

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