While most planners focus exclusively on managing their clients’ liquid portfolios, they may miss a valuable opportunity to help when clients are interested in selling their closely-held businesses. Because you are a trusted adviser, clients may naturally turn to you for guidance when considering the various capital options available to them. These include, but are not limited to, an outright sale. While it’s not prudent to try to single-handedly administer such a transaction yourself, you can still add tremendous value by helping them navigate this process. Having interacted with dozens of financial advisers, here are my top three recommendations:

Jay S. Lipsey, partner at McCombie Group


In the hope of saving fees, some business owners try to sell their businesses themselves or with the help of third-party professionals with whom they have an existing relationship (accountants, lawyers, wealth managers, etc.). This is particularly the case when they already have a prospective buyer lined up. However, scrimping on expertise is penny-wise and pound-foolish. The attention required to carry out this process successfully constitutes a full-time job. Allowing the business owner to take on this added responsibility diverts her focus from running the company. Remind your clients that sale price is generally determined by a company's most recent financial performance, so this is the most critical time to dedicate all available resources toward maximizing results. Furthermore, a sale is a delicate, complicated and time-intensive process that should be handled by specialized attorneys, accountants and other relevant professionals who understand the range of available strategies and their implications.

Remind your clients that sale price is generally determined by a company's most recent financial performance, so this is the most critical time to dedicate all available resources toward maximizing results.


While it’s tempting to compare all available offers based on a single purchase price, the reality is rarely that simple. Through earn-outs, seller notes, equity participation and even ongoing consulting contracts, buyers can shift risk to owners by subjecting payouts to future contingencies. While the specific mechanisms vary, they all create a partnership – in essence, a marriage -- with the buyer. Selecting a buyer you trust and feel comfortable with is your best layer of protection. Additionally, you should encourage the client to think through the impact of a sale beyond their personal finances (e.g., net worth and liquidity). Companies have a wide range of stakeholders, all of whom will be impacted differently in the event of a sale. They could include family members who work for the business; the community that benefits from a stable source of employment; customers and suppliers; and even the owner himself or herself, whose identity and legacy is tied into the firm.


Other options exist beyond the private equity investors and strategic buyers that most planners – and most investment bankers – tend to think of first. This includes a strategy called a dividend recapitalization— wherein the business borrows to finance a distribution to the owner, or works with a family office investor —that can offer both better compatibility and more flexible terms.

Without the restrictions placed upon traditional institutional and public buyers (public disclosures, limited holding period, etc.), family offices have the ability to structure a transaction in a personalized way most relevant to a business owner. This could take the form of an agreement to allow for a staged buyout over time -- or the opposite scenario, in which the original owner buys back into the company to pass the business along to the next generation. They are also more likely to respect the current owner’s legacy because they work with family businesses themselves. Especially in cases of smaller practices that are family-run businesses, or resemble them, family offices can make attractive buyers. Given that they work with family businesses themselves, they understand the importance of an owner's legacy.

Jay S. Lipsey

Jay S. Lipsey

Jay S. Lipsey is a partner at McCombie Group, a collection of family offices that focus on investing in family businesses.