Good exit planning requires a good team. When the owner is ready to start the process, they need a stellar team to ensure they leave the business on their terms and with assets to ensure their future. Once the core team is in place, the owners start to see a path, and their exit strategy begins to take shape.
Advisors, particularly Certified Exit Planning Advisors® (CEPAs), play critical roles at various stages of a business owner's journey. Ultimately, they help create a higher valuation while aligning the business, personal, and financial goals of the business owners. As in any team, there are layers and levels of roles. Typically, the core team for a business owner includes their CPA, Financial Advisor, Attorney, Value Advisor, and Banker.
We spoke with Steve Hopkins, CEPA since 2022, and owner of Charter BTA, LLC, about the role of an exit planning advisor on an owner’s team.
Managing the Business and the Personal Aspects of the Exit
Steve shares that balancing the business and personal components involved in exit planning is paramount for the ultimate success of the exit strategy. He says, “The owner must have something to move to and an understanding of what is next. They should not be in a scenario of moving away from something they have spent their life immersed in. That is a formula for regrets.” By moving toward a post-exit goal, the owner is more prepared for their personal plan outside of their business.
Steve explains, “Acknowledging right up front that this will be as personal and emotional an event as anything they’ve ever done, is crucial.” A concept known as the Three Legs of the Stool focuses on three major elements you will see in the definition of exit planning: Business, Personal, and Financial. By including them in your exit plan and day-to-day business strategy, you put yourself on track to have a successful and significant exit.
Navigating The Exit Planning Team
Undoubtedly, exit planning is a team sport. When a business owner is ready to consider exit planning, the first contact is usually a trusted advisor. As advisors who work with clients willing to create a strategy will tell you, and as Chris Snider says in Walking to Destiny, "Change your conversation." Changing the conversation also means changing the approach. There are two critical things you must do when engaging owners in planning for transition:
- Ask the owners the right questions versus giving them the correct answers
- Share insights early and often, regardless of the owner's status as a client
However, when the team comes together, the first step for an advisor is to understand their individual and specific role. You should ask yourself three questions:
- Who am I to the owner?
- Who do I want to be?
- What is my place on the team?
When putting their team together, the business owner is looking for professionals with education, proficiency, and experience. But they are also looking at advisors who are a source of connections to people and resources. The exit strategy or transition team should be individuals who share common goals and principles. They should be comfortable with the same process and framework and be able to function at a high and impactful level.
Working Closely with Business Owners
For exit planning advisors working with business owners, it is essential to recognize that exit planning is a good business strategy integrated with a business owner's business, personal, and financial goals and objectives. It is not a "someday" concept but rather the daily things a business owner does that benefit the here, now, and tomorrow. It makes "value" the primary goal, not income; it is measurable, involves your entire team, and allows an owner to invest in their success by bringing in the expertise needed to create a dynamic plan.
Steve says, “Complete and thorough discovery is key to delivering client satisfaction. Clearly defined, communicated, and agreed upon scope, project management, and coordination of owner, owner’s management team, and all advisors are key.”
Learn more about how to work effectively on an owner’s exit planning team and the benefits of working with an exit planning advisor here!
