3 Advisor Attributes to Consider
When Building Your Exit Planning Advisory Team
[fname], for business owners who are thinking about exiting their business
in the future, there are many things to consider to assure the business
transition happens in a smooth manner and accomplishes your personal and
professional / corporate goals.
Owners are wise to seek the counsel of advisors in this complex and delicate
area. Your choice of experienced advice in this area can mean the
difference between success and failure to reach your goals. Not only do
you need to know which types of advisors to choose but also when to bring
them onto your team.
Here are the top three things to consider when building your exit
planning advisory team.
Process-Oriented vs. Solution- Oriented Advisors
Exiting a business is a process, not simply a transaction. The
process includes an owner thinking through all of that owner's personal and
company goals as well as the implications of the business running without
their individual efforts, and how the owner will live without the business.
Owners who go through this process ask themselves, 'who can run the
business, other than me?' and 'what would fill my life in the absence of
working in the business?'
Unlike a solution-oriented approach, where issues are identified and your
advisor brings you solutions to the problem, the exit
planning process requires time and self-reflection to decide what is best
for you, both from a business and a personal perspective. The advisor
leading this initial process should have a practice that is designed to
support this type of ongoing engagement with you, the owner. This is
generally not consistent with the placement of products or solutions at this
stage of the planning; generally speaking, solutions and the advisors who
provide them come later in the process.
Relationship-based vs. Transaction-based Approach
Similar to 'process-oriented' vs 'solutions-oriented' advisors, owners
should consider whether their advisors are relationship-based or
transaction-based. This distinction applies both to that advisor's approach
as well as to their manner of compensation. The world of professional
advisors can be generally divided into two types; relationship-based
advisors and transaction-based advisors.
Relationship-based advisors are those who come into the business
owner's lives and work with them, year-in and year-out, on a consistent
basis. Two of the leading relationship-based advisors are accountants
(for reasons stated already) and attorneys (often at the beginning of
a business venture and again when the need arises). Many owners also confide
and place their trust in financial planning professionals, insurance and
risk management advisors as well as general business coaches and
These advisors take the approach that a relationship with a business owner
exists over a long period of time and they remain available to these owners
as needs arise.
Transaction-based advisors are those who approach the relationship
with the owner with an eye towards addressing a specific, non-recurring
issue for that owner. These advisors might include real estate brokers,
consultants who start and complete certain projects for owners,
valuation professionals as well as mergers and acquisitions advisors.
These advisors enter the lives of owners to execute a certain transaction.
For the most part, these advisors also plan to leave the owner's life
shortly after the transaction / project ends.
Shifting from 'Planning Team' Members to 'Execution Team' Members
Owners are advised to initially seek out planning team members who are
relationship-based as well as process-oriented to lead the initial stages of
the exit planning. However, an exit planning process often culminates with a
transaction. When this happens, transaction-based advisors are necessary
additions to the team. At this point in the engagement the focus shifts from
the 'planning team' to the 'execution team' and different players are
Planning Team Members vs. Execution Team Members
Planning team members – those described above - are critical to taking the
owner through the initial stages of the exit planning process. However, when
your exit planning brings you to the point that you are ready to transact,
you will need to employ the services of transactional advisors. These
M&A advisors to help find buyers and explain the business to the future
owner, as well as to assist in the actual transition of the business to the
Legal advisors who focus on transactions – these are 'transactional
attorneys' who have experience negotiating and structuring deals for owners.
Accountants and tax advisors who understand and have experience in the world
of transactions and can help assess the tax implications of a transaction
for the owner.
There are a number of other transactional advisors that need to be
identified for the transaction team. These will vary depending upon the
details of your transaction.
The Vital Role of the Quarterback
No matter where you are in your planning or transacting, it is helpful to
seek out an advisor who can and will serve as the quarterback to your exit
planning as well as your exit transaction. These multi-skilled advisors are
some of your best allies in drafting a plan for your exit while also helping
you to recruit all of the necessary 'soft' and 'hard' skilled advisors who
will be needed for this multi-year engagement. The quarterback holds a
special place with the owner through all stages. Owners are well advised to
seek out exit planning quarterbacks who have made a commitment to being
trained, supported and have the tools and the right network to recruit the
people needed for the planning and transaction.
Today I made the argument that owners need to consider different types of
advisors during different stages of the exit planning process. Generally
speaking, owners should seek out the counsel of 'relationship-based'
advisors in favor of 'transaction-based' early in the process to create and
begin implementing a multi-year exit plan.
Later in the process, when a transaction is ready for execution, advisors
with a different skill set will need to be employed.
The exit planning process is one that should not be conducted alone and
should include the patience and approach that relationship-based advisors
bring to the owner as well as the execution skills that are needed later in
the process. We hope that you find this helpful in advancing your exit
As always if you need some advice, you're
welcome to email me of call me here at the office at 281-993-4530.
Charles Wilson, CPA/CFF, CGMA, CBEC
Charles Wilson, LLC
307 S. Friendswood Dr, Ste B-2
Friendswood, TX 77546
Charles Wilson, CPA/CFF,
CGMA, CBEC is a Certified Business Exit Consultant and is affiliated with
Pinnacle Equity Solutions, Inc., an Exit Strategies Training and Solutions
company. Parts of the content in this email are taken from previous
Pinnacle Equity Solutions, Inc's. newsletter library and website in
accordance with Charles Wilson's certification in Pinnacle's Certification
and Membership Program. All Copyrights are the properties of Pinnacle Equity
Solutions, Inc. and Charles Wilson, LLC and their respective owners.