Who Should be on Your Exit-Planning Team?

Who Should be on Your Exit-Planning Team?

By Corey Young, MBA, CVA 

Let’s discuss the best approach:

• Financial Planner. A financial planner helps clients meet their current money needs and long-term financial goals. They use a structured process to guide clients toward prudent financial decisions to maximize their potential for attaining life goals. Using their knowledge of personal finance, taxes, budgeting, and investments—combined with analytical tools and data that can illustrate potential outcomes—financial planners make recommendations, which help clients make informed decisions.
• CPA. Almost everyone reading this article has a CPA. While they are an invaluable resource, over-relying on them on a consultant basis can put them in a conflicting role when it comes time to exit your business. Per Investopedia, “Although some CPA firms serve as business consultants, the consulting role has been under scrutiny following the Enron scandal where Arthur Andersen simultaneously provided audit and consulting services which affected its ability to maintain independence in its audit duties If the CPA firm is auditing the same company that the firm also does consulting work for, then there is a conflict of interest. This conflict voids the CPA firm’s independence for multiple reasons, including: (1) the CPA firm would be auditing its own work or the work the firm suggested, and (2) the CPA firm may be pressured into unduly giving a positive (unmodified) audit opinion so as not to jeopardize the consulting revenue the firm receives from the client.”
• Transition Consultant. A business transition consultant helps a business owner assess the current asset value of the business and establish its attractiveness to various buyers. A transition consultant also helps owners assess where they’re at motivationally, as professionals and business owners in their readiness to sell. The consultant then works together with practice owners to develop exit strategies that could begin in the immediate future or develop over a couple of decades. Frequently, transition consultants also serve as the broker of practice sales. This is a real plus because their work in the open market makes their recommendations much more meaningful. A widely accepted recommendation is to engage a transition consultant long before you are ready to sell. Analogous to this recommendation is diagnosis and prevention. Waiting to contact a broker when you are ready to sell is considered emergency care.
• Attorney(s). Two different types of attorneys need to be engaged at some point during a well-developed exit strategy. First, an estate planning attorney to help set up wills and trusts. Second, an experienced transition attorney when the time comes to exit the business.
• Banker. Developing a solid relationship with a banker can open doors of possibility both currently and into the future. Because of banks’ (mostly outdated IMO) hiring and retention policies, bankers tend to move around quite a bit. My recommendation is to focus on the banker more than the bank.

Who do you currently have on your team?