How Advisors Can Successfully Collaborate on Exit Planning Projects

?Perhaps the most poignant statistic highlighting the failure of advisors to collaborate with business owners is the fact that 80-90% of owners who attempt to sell their businesses fail to successfully close a deal. This failure is often attributed to poor preparation and a lack of coordinated planning among professionals. When advisors work in isolation, they may overlook critical aspects of the business exit process, like an accurate valuation and/or other important legal, tax, retirement, business, exit, and succession planning considerations.

A “siloed” exit planning approach can result in misaligned strategies, reduced business value, and/or an inability to meet buyer expectations, ultimately leading to an unsuccessful transaction, or less favorable outcome for the exiting owner. Collaboration among advisors, on the other hand, is key to avoiding these pitfalls and ensuring a holistic business exit plan.

Advisor collaboration is essential in business exit planning for several reasons:

?1. Comprehensive Planning Expertise:

?Exit planning requires expertise in various areas such as finance, legal compliance, tax, retirement, valuation, business consulting, exit, and succession planning. A single advisor often cannot cover all these areas effectively. Working together ensures that the client benefits from a comprehensive, integrated exit plan.

?2. Customized Solutions:

?Every business has unique needs and desires when it comes to exit planning. By collaborating, advisors can tailor strategies that align with these needs and desires, addressing the business, retirement, and emotional aspects of each business exit transaction.

?3. Mitigation of Risks:

?A lack of coordination can lead to overlooked details or conflicting advice, increasing risks for the exiting owner. Collaborative efforts ensure that all aspects of the plan are aligned and all potential pitfalls proactively addressed.

?4. Efficient Problem-Solving:

?Complex issues, such as tax optimization or stakeholder buy-ins, are better addressed through collective brainstorming. A multidisciplinary team can provide innovative solutions that a single advisor might not consider.

?5. Streamlined Communications:

?When advisors work together, they can present unified recommendations, simplifying the process for the client. This reduces confusion and ensures client understanding and confidence in the exit plan.

?6. Value Maximization:

?Effective collaboration can help maximize the business’s value before the sale or transfer, ensuring that the client achieves the best possible outcome.

?7. Stronger Client Relationships:

?A cohesive team of advisors demonstrates professionalism and a client-first approach, strengthening the relationship with the client.

?By working together, advisors not only enhance the quality of the exit planning process but also position themselves as a valuable resource for their clients.

If you are a business exit advisor and would like to collaborate more with other advisor, here’s how you can work together effectively on business exit projects:

?1.??? Defining Roles and Responsibilities:

There are at least a half dozen advisors needed for a successful business exit, each of whom play a different role:

? Business Consultants and Coaches: Educate the business owner about different business exit and succession strategies, prepare the business for sale, enhance value, and align the exit plan with owner’s personal and business goals & objectives;

? Business Brokers, Investment Bankers, Private Equity Groups, ESOP Consultants, and M&A Advisors: Help find buyers, structure deals, and maximize valuation;

? Financial Advisors (such as CFPs, and Insurance Agents): Plan post-exit wealth management strategies and ensure that the business owner’s personal financial goals are met;

? Accountants / Tax Advisors: Optimize tax implications and ensure financial records are in order; and

? Attorneys: Draft contracts, ensure legal compliance, and manage negotiations.

?2.??? Developing a Unified Strategy:

Advisors should work together to develop a unified exit strategy by:

? Establishing clear exit and succession strategies that identify goals, timelines, and key milestones;

? Collaborating on valuation and pre-sale preparations, such as cleaning up financials or streamlining operations; and

? Ensuring all advisors align with the owner’s objectives, which should maximize proceeds, minimize taxes, and assure a smooth business transition and financially comfortable retirement.

?3.??? Streamlined Communication:

Advisor communications “best practices” include:

? Regular team meetings to share updates, resolve conflicts, and keep the process on track;

? The use collaboration tools, such as project management software, to track tasks and deadlines; and

? Periodic client updates from a single source – namely, the advisor “quarterbacking” the business exit.

?4.??? Pre-Sale Readiness:

To get a business ready for transition to the buyer:

? Business advisors should focus on improving operations and increasing profitability to boost valuation;

? Financial advisors and accountants should work together to present clean financial statements and estate planning; and

? Attorneys should ensure compliance with legal requirements and prepare necessary documentation.

?5. Managing the Sale or Transition:

When preparing the business for sale or transition:

? Business brokers and attorneys should collaborate to structure and negotiate deals;

? Tax advisors and financial planners should identify strategies to reduce tax burdens and secure financial stability; and

? All advisors should coordinate their efforts to ensure that the due diligence process runs smoothly.

?5.??? Post-Exit Planning:

Following the owner’s exit:

? Financial advisors should help manage the proceeds of the sale or transition;

? Tax advisors should ensure compliance with exit-related tax obligations; and

? Business advisors should assist with the owner’s transition to post-business life or new ventures.

?Benefits of Collaboration:

The three – (3) benefits of business exit advisor collaboration are:

? A “holistic approach” that ensures all aspects of the exit plan are covered, reducing risks and maximizing outcomes;

? An “efficiency approach” that prevents redundancy and streamlines processes; and

? An “approach focused on maximizing value to the exiting owner” by combining the expertise of the advisors “at the table” to enhance the business’s value and meet the owner’s goals.

?In summary, multiple exit advisors collectively play a vital role in guiding business owners through the complex process of exiting their businesses, whether through selling, transferring, or closing the business. ?As this article emphasizes, collaboration among advisors from different disciplines is essential to ensure a comprehensive, seamless, and successful business exit.

?About Greater Prairie Business Consulting, Inc.:

Greater Prairie Business Consulting, Inc. is an award-winning, national consulting practice serving entrepreneurs, small to mid-sized privately held and family-owned businesses and middle market companies of any type with revenues between $1 million and $250 million. The firm helps small, mid-sized and middle market companies maximize their performance and exit.

Greater Prairie Business Consulting, Inc. can be reached by calling 1-800-828-7585 or emailing [email protected].

?About the Author:

James J. Talerico, Jr. is an award-winning author, speaker, and a nationally recognized small to mid-sized (SMB) business expert.

With more than thirty- (30) years of diversified business experience, Jim has a solid track record and an A+ BBB rating helping thousands of business owners across the US and in Canada tackle tough business problems to improve the performance of their organizations.

His client success stories have been highlighted in the?Wall St. Journal,?Dallas Business Journal,?Chicago Daily Herald, and on?MSNBC’s Your Business. He was named “Texas Business Consulting CEO of the Year,” by?CEO Today Magazine, identified as a?“Top 10 Management Consulting Entrepreneur to Watch in 2023” by Entrepreneur Magazine, was listed among the?“10 Most Visionary Companies to Watch in 2023” by Inc. Magazine, and has also been ranked among the?“Top Small Business Consultants”?followed on?Twitter.

For more than half a decade, Jim was a regular guest on “The Price of Business,” a nationally syndicated radio program on Bloomberg Talk Radio and has also appeared as a subject matter expert on many FOX Radio interviews. He is a regular contributor to several blog sites and has frequently been quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, The Entrepreneur’s Review, and on INC.com, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.

Jim received a Gold?“Stevie Award”?for?“Thought Leader of the Year,”?a Gold?“Stevie Award”?for?“Media Hero of the Year During Covid”?and a Bronze?“Stevie Award”?for?“Best Entrepreneur”?in the Category of?“Business and Professional Services”?at the?American Business Awards ??in New York City. The competition received more than 3,700 nominations and is the premier accolade for business excellence in the US honoring organizations of all sizes and industries. Jim also received an?“Outstanding Leadership Award”?at the Money 2.0 Conference for his contributions to the financial services industry.

Jim is the author of “8 Steps to Becoming an ETHICS FOCUSED ORGANIZATION,”? a small business certification program that utilizes a unique eight – (8) step approach for strengthening ethics in any organization. The certification program won the Better Business Bureau’s “Torch Award for Ethics” for the North – Central Texas Region, the International Better Business Bureau’s “ Torch Award for Ethics,” and a Gold “Stevie Award” for “Ethics in Sales” at the International Sales & Customer Service Stevie Awards ?. Participants who complete this certification program are eligible to receive eight – (8) continuing education units from the University of Texas’ Division of Enterprise Development.

Jim received his Certified Business Exit Consultant (CBEC) ? designation from The International Exit Planning Association (IEPA) to help entrepreneurs, small business owners, family businesses, and middle market companies maximize their business exit, and he received his certification in succession planning from the ASPE. Jim currently serves on the IEPA’s education committee.

Jim is also a Certified Management Consultant (CMC) ? and an active member of the Institute of Management Consultants.