Key players you need on your exit planning team

By J. Tyler Thompson, CFP^®, CEPA^®, AAMS^®, WMS^®

Four out of five business owners who are looking to exit in the near future don’t have a formal transition team, according to the Exit Planning Institute.

That’s alarming because it can mean that entrepreneurs are missing out on the opportunity to realize the full value of the business they grew and nurtured.

The most effective exit planning team should include a handful of experienced professionals whose collective guidance and wisdom helps ensure that the maximum value is achieved, the right buyer is selected, and that the business is positioned to thrive after the leadership team takes over.

Thoughtful and purposeful exit planning is based on an integrated approach to selling or exiting a business. It’s designed to help business owners holistically address all of the business, legal, financial, tax, insurance and personal issues that are impacted when a privately owned business changes hands.

A comprehensive exit planning team should include these clutch player professionals:

• Certified Exit Planning Advisor — This is a specialty certification for professionals who work closely with business owners to plan and execute successful exits.
• Certified Financial Planner — Your Financial Planner/Wealth Manager serves as the quarterback and strategist for the entire process, and helps create a new plan for growing and preserving your wealth as you achieve a “work optional” lifestyle.
• Investment banker — They serve as the dealmakers and help identify possible buyers while letting the market know that your company is up for sale.
• M&A attorney — They draft deal terms, purchase and sale agreements, employment contracts, vendor contracts and other documentation, and also serve as an advocate for favorable terms and language that protects your interests.
• Certified public accountant — Involving your CPA early can help uncover and resolve potential tax issues, and creates better opportunities for proactively finding ways to minimize your tax burden.
• Business valuation advisor — Is the multiple in the buyer’s offer really the best you can get? These professionals can analyze market trends, recent comparative deals and the enterprise value of your business to ensure you get the best terms.
• Estate planning attorney — Whenever there is a major life event such as exiting a business and gaining new wealth, it’s important to update your estate plan and rethink your wishes and needs for your will, trusts, insurance, beneficiaries, etc.

Sometimes these professionals can play dual roles on the team. For example, a financial planner who also has experience advising business owners about exit planning may have better insights and advice when fulfilling both of those roles because they have the multi-disciplinary training and experience to think of each issue through numerous lenses.

Over time as discussions with potential buyers intensify or your timeframe for exiting accelerates, your team may expand to include additional advisors or specialists such as business integration consultants or employee retention experts.

As a wave of Baby Boomers and Generation X business owners look to transition in the coming decade, it’s vital to start assembling a team of trusted professionals who can learn your business and your financial and personal goals to help you achieve the most successful exit.

Any opinions are those of J Tyler Thompson and Capitas Advisory Group and not necessarily those of RJA or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete