Pinnacle Equity Solutions – Exit Planning | Business Exit Planning

Mastering the Exit Planning Conversation (with Business Owners)

Posted on February 9, 2012 by admin

It all Begins with a Conversation
A wise advisor once said ‘nothing happens in our business until you are sitting face-to-face with a business owner’. And, since you are sitting with this owner, it is presumed that the meeting had a formal or informal agenda but, in any case, a conversation is going to occur (NOTE: Pinnacle does a large amount of training on how to network, market, and prospect to get these meetings – both at our 2-day workshop and our Certification Course – but we are skipping past all of that for now and putting ourselves in the actual meeting itself).

The first question that you need to ask yourself is ‘what are you going to say?’ Or, rather, ‘what questions are you going to ask to build a lively and meaningful conversation?’. It is how you approach this initial conversation that will determine what type of success you will have with this engagement. However, before we dive into this actual conversation, let’s first ask how much the owner understands about exit planning by the time you get to this meeting.

You and the Owner Cannot Operate in a Vacuum
My friend Bruce Wright has a bold proposition for business owners (and advisors) who want to work with him – he tells them that he will not take a meeting with them until they have read his book. By doing so, Bruce is in a position to have a more fully-informed conversation with the person he is speaking with and engage them on the content that he put in his book.

I believe that this strategy can work very well with any piece of content that you have that you want to discuss with someone else. In other words, you do not need to be the author of the content, but you should be well versed in what the content says and be prepared to have a conversation on the topic. Then, by suggesting (or insisting) that the business owner read the book / content prior to your meeting, you can be assured that your conversation will revolve around the topic of the material that you forwarded.

There is another element to this pre-stage of the conversation that you will have with a business owner. Namely, it makes the owner commit to the information gathering process before meeting with you, allowing them to develop questions that you can answer to take your conversation further and assist them with their thinking around their exit. This is very important advice. I sit in the unique position of working with more than 100 professional advisors in my Membership, and every time we discuss a prospect I ask ‘what information did you send for them to read prior to the meeting?’. On occasion an advisor will meet with a business owner ‘cold’ and, almost always, the meeting is not as productive as when the owner commits to reading material in preparation for the meeting. It is simply a fact that there is a very strong correlation between exit planning engagements that are achieved with owners who read the Exiting Your Business book and commit to learning more about the exit planning process prior to a meeting with the exit consultant.

There are two (2) important components to having the owner be prepared for the exit planning conversation / meeting:

1. Exit planning is a new field of study so it cannot be expected that the owner has a reliable base of knowledge to have a solid conversation on this topic. So, without the owner reading a book (or some other content), you will likely spend most of your time educating this prospect / client. This is very good for them but probably not so good for your business as meeting time should be about rapport and relationship building, not necessarily about teaching a lesson (most of the time for free).

2. By being better prepared for the meeting, the owner can see you as a unique resource and develop their questions to make the meeting more productive.

One of the best questions that my friend Bruce asks a business owner at their meeting is ‘where did you see yourself in the book that you read’. I too like to ask the same question to a well prepared business owner who I am meeting with for the first time. I want to know which parts of my Exiting Your Business book resonated most strongly with him / her so that we can get focused more quickly on the issues that he/she faces in their business exit.

Building Both Confidence and Trust – ‘Why Should I Trust You?’
By getting right to the issue(s) that are most important to this business owner, I am in a position to begin to build trust right away. Remember, this meeting is about them, not you. Nothing is more important than this point. You are not there to impress them with knowledge or provide detailed math or legal explanations. And you are certainly not there – at least at this initial meeting – to provide answers to their exit situation. Simply put, you are there to listen. You need to listen to why they are contemplating an exit from their business. The reason that listening is critical is because it allows you to build intelligent questions that are relevant to the owner’s situation.

One of the most striking aspects of this Great Recession has been the loss of trust that people have in each other. And, almost always, a business owner brings to your meeting a bad experience that they had in the past and is guarded against making the same mistake again. That mistake probably started with an advisor doing too much talking, the owner feeling like this person knew what they were doing so they could be trusted and then, at some point, the advisor turned on them by falling down on the level of service and broke the trust that the owner assumed as a part of their relationship.

Selling the Invisible Quote
In Pinnacle’s Certified Business Exit Consultant™ course we use a book titled ‘Selling the Invisible‘ to address practice management issues around discussing exit planning with business owners. We actually have two (2) days of our week-long course devoted to practice management and the approach and engagement of business owners (again, see the webinar link for details). So, as the book’s name suggests, we are selling an invisible service. And, because exit planning is an emerging field, our prospects and clients do not yet have a frame of reference to understand what an ‘exit plan’ even is.

I use a few quotes from Selling the Invisible at our CBEC™ course that should assist you in Mastering the Exit Planning conversation. They are:

“. . . compared to products, services are loose cannons on deck, capable of pivoting around and blowing up the ship any minute . . .”

“So as a service marketer – doctor or architect, dry cleaner or accounting firm, broker or house-painter – you face prospects almost shaking with worry, and sensitive to any mistake you might make. That is where your marketing must start – with a clear understanding of that worried soul.”

These quotes are included to remind you that you cannot Master the Exit Planning conversation if you do not approach the initial meeting with this mindset. And, don’t take the position that a successful business owner does not have these concerns because they were ‘tough enough to survive in business’. That is a huge mistake – all owners have these concerns and they are intimidated by many professionals and complex talk that they don’t understand. Given that you are discussing the largest financial and emotional transaction of this owner’s life, you need to approach the initial meeting and conversation with that level of respect and to begin the trust-building process.

Discussion of Goals, Readiness, Exit Options and Other Topics in the System
Once the initial conversation has started, you will at some point in time want to begin to learn about the owner’s goals. You need to discover what they want both for their business as well as for their personal goals.

A part of the ‘goals’ topic is the owner’s readiness to meet those goals. It is very important to discern how far this owner is from reaching their goals. In fact, I would argue that if you do not know the owner’s goals coming out of the initial meeting (or at least the 2nd meeting) then you truly have no idea as to whether (or even how) you can assist this owner.

For example, if the owner lives off of $850,000 per year from the business, has $500,000 saved for retirement and the business has $225,000 in annual cash flow (after the owner’s salary and perks), it is likely that there is a very large Value Gap between the value of the business and what this owner needs to replace their income. Learning these facts early on is critical to the process because it puts you in the shoes of the owner and allows you to deliver advice and guidance that is consistent with their needs.

And, here again we come to the challenge with discussing these issues. Namely, no owner enjoys admitting that they have not planned for the future and that they will need a lot of help to achieve their goals. In order for the owner to share this information with you they must trust you – plain and simple.

Exit Options
With a solid education in exit planning, you can take those goals and the owner’s readiness and begin to introduce – at a high level – some concepts related to exit options that are available. It is refreshing for an owner to hear about options that are available to them. In particular, a skilled exit consultant can discuss these options in the context of a multi-year plan for this owner’s eventual exit. In doing so, you will be in a position to provide dynamic solutions to a complex situation.

Accompanying these talking points are hundreds and hundreds of sub-points that should be made or incorporated in your thinking as the conversation progresses. This is why exit planning training is so important. You need to have a solid foundation to have this conversation with owners and enough confidence and content to deliver the message in a compelling manner. This is all necessary to assist the owner with moving ahead to the next stage of the engagement and it all begins with your preparation for this meeting – i.e. ‘mastering the exit planning conversation’ and being prepared to deliver on the promises of this conversation with a solid exit planning process.

I’ve spoken with so many advisors who have this conversation and then wonder why nothing has happened. Our next section addresses this.

How Many Meetings Should It Take? What is the Owner Thinking?
A few years ago I did a practice management call titled ‘why does the owner who attended my exit planning breakfast presentation not return my phone calls?’ (Pinnacle’s Member’s content library, March, 2011). This call was created to bring light to the fact that an owner is undergoing a major change with contemplating the planning of their exit from the business. And, as a result, it is not uncommon for owners to have delayed responses as they absorb the information that they heard from you (either at a breakfast presentation or at a first meeting). It is important to know that the owner has not excluded the exit planning from their consideration. In fact, the opposite is often the case – owners struggle with these concepts and often take a long time to process the information and make a decision to move ahead.

Therefore, there is no solid answer as to how many meetings it takes to engage an owner with an exit plan. Your best bet is to keep a strong pipeline of prospects and get better and better at building a compelling value proposition to getting started with the exit planning sooner rather than later. This will assist you in creating an environment where the owner can say ‘yes’ to the exit plan and you will move faster towards the engagement.

Where the Real Opportunity Lies with Exit Planning for Owners
You may be reading this newsletter and thinking that this is a lot of work to attract a new prospect. On the other hand, you may be reading this thinking that what I described is no different than any of the advisory services that you have been offering throughout the years. In either event, I would encourage you to attend an upcoming educational program to learn not only how to master the exit planning conversation but also to figure out how exit planning is going to be a profitable part of your business model, including how you will execute on engagements.

Pinnacle’s Exit Planning Certified Business Exit Consultant™ Webinar

I hope that this newsletter was helpful to you and your practice and I encourage you to attend our upcoming webinar to learn more about how Pinnacle is addressing these issues in the marketplace today.

Regards,

John

Beyond The Exit Plan – Event Review & Discussion

Posted on January 27, 2012 by admin

How the ‘Beyond the Exit Plan’ Came About

Here at Pinnacle Equity Solutions, we view the professional advisors who are in our Membership as our partners. In that regard, it is our job as a support, licensing and certifying organization to deliver on ‘creative’ ways to enhance our Member’s practices. We found the best way to do this is to ask our Members what they would like to see that would help their practices. In this case we did just that and created a first-of-its-kind, ‘Beyond the Exit Plan’ event where we discussed critical services and products that accompany most, if not all, exit plans – i.e. Mergers and Acquisitions, Wealth Management, and Insurance. This was a ground-breaking event in Orlando, Florida as our attendees received 2 1/2 days of education on all of these areas. Further, as Pinnacle boasts some of the leading advisors in the country within our Membership, we coordinated our efforts to have all of our presentations delivered by Pinnacle Members. The result was outstanding and this summary is intended to provide insights into the 2 1/2 day session with some ideas to consider for your own practice.

The purpose of the event in Orlando was to connect and educate advisors to improve the rapidly growing exit planning industry and better serve business owners. In 2011, we began looking into opportunities for advisors to collaborate on their engagements and work together to improve the quality of their service because as exit planning emerges as its own industry, we need to assure that the value that is brought to each engagement is reflected in the compensation to talented advisors. More importantly is the seamless delivery of complex and critical services to the owner. Our fifty (50) attendees came to learn how certain products and services work.

Event Pre-Work and the Topic of Fee-Sharing
The pre-work for this event was a review of Pinnacle’s thirty eight (38) page white paper (available upon e-mail request to select advisors) which outlined the issues for each discipline (M&A, Wealth Management and Insurance) including the licenses required for each service as well as basic concepts surrounding the legal procurement of these services and the permissible manner of sharing fees. We emphasized the fact that many of our attendees have no interest in sharing fees and see it as a compromise to their objectivity with the client. However, we also discussed the fact that in order to attract talented advisors to the exit planning marketplace, it is important to have a ‘financially viable’ model for earning what these advisors are worth. Further, the owners that we serve understand all too well the difference between covering their business overhead and earning a profit for their efforts. It is profits that will empower our emerging marketplace and it is the individual decision of each advisor as to how they approach this issue. That being said, it is imperative that any of these financial arrangements be disclosed to and discussed with exiting owners in order for a fee-sharing model to have integrity.

The Event

Mergers and Acquisitions
Our 2 1/2 day event began on Thursday morning (Jan. 19th) with the topic of Mergers and Acquisitions and how ‘external’ transactions are a larger part of our exit planning practices. As business exit consultants we need recognize that many owners perceive the notion of an ‘exit’ as a sale of their business. Therefore, if you lack the ability to assist an owner with this type of introduction to an M&A advisor or to provide the service yourself, many owners will see your offering as incomplete. To address these dual issues, we first educated our attendees on the M&A business and then presented two (2) of our Member’s platforms and service models for potential partnerships and introductions.

Among the specific topics discussed were; how a typical auction process is run, how to introduce an M&A service provider to an owner, and the Series 79 license and its importance in today’s marketplace (a concept that Pinnacle covered in depth in May of 2011 and is available in our Member content library). Our presenters spoke of the challenges and opportunities that present themselves in an M&A practice and tied their teachings into our emerging exit planning profession so that our attendees had the proper context to evaluate when and how an M&A advisor could be introduced to an exiting owner.

Wealth Management
After lunch, we moved on to the topic of Wealth Management for the discerning, high-net-worth exiting owner. The speakers provided an overview of their discipline in the context of exit planning and discussed measuring the financial readiness of an owner, how wealth management fees are generated, and the technical requirements to ‘register’ for a professional alliance. The reality of the business owner’s financial situation is that a majority of their wealth will be tied to their illiquid business. However, the financial advisory marketplace primarily focuses on ‘wealth management fees’ (not planning fees) that relate to liquid assets of a client. Therefore, exiting owners often are ignored by the high-end marketplace of wealth managers because they are not currently ‘liquid’.

One of the largest take-aways from the presentations was the unique role that the wealth manager plays in the life of an exiting owner. There is a great opportunity for wealth managers to better connect with these owners by gaining a greater understanding of the business issues that these owners face every day, including the strategic decision around an exit. The earlier an advisor can discuss these financial issues with an exiting owner, the better off the owner will be and the more trust and loyalty the advisor will earn, leading to a substantially more profitable relationship for all parties.

Finally, for our business advisors and consultants who bill by the hour – or a ‘time and materials’ billing model – the potential for sharing in wealth management fees offers a recurring stream of revenue that can be very attractive. How these relationships are established was discussed, providing our attendees with an opportunity to consider incorporating this into their businesses.

Risk Management and Exit Planning
On Friday we focused the presentations on the insurance industry and opportunities that commonly arise in the context of an exit planning engagement. Speakers introduced products, discussed license requirements, and presented different uses for insurance in exit planning. The reality is that the insurance business is highly creative and flexible and the need for insurance amongst exiting owners is prevalent and a part of every exit plan. Therefore, our full-day of curriculum focused on a number of different insurance topics, including:

1. Basics of insurance products, the underwriting process, and the industry.
2. Advanced concepts relating to estate taxes and integration with estate planning.
3. Life insurance as a savings vehicle.
4. Insurance products that can guarantee pension and retirement income as well as guarantee certain rates of return.
5. The positioning of insurance within a business owner relationship and the importance of conveying the proper message to exiting owners.

At the end of our day of risk management training – presented by five (5) of our Pinnacle Members – we held a panel discussion to discuss the license(s) required for this business as well as the various models and sharing platforms that are available. It was a dynamic conversation, showing our attendees how they can position these products and services within their relationships to the mutual benefit of themselves and their exiting owners.

Growing into the Exit
Saturday morning was a two (2) hour presentation on ‘growth strategies’. This set the stage for Pinnacle’s 2012 curriculum focus as many of our exiting owners need to increase the value of their businesses in order to close the gap between what they have and what they need to retire. We call this the ‘value gap’ and our presenters covered basic and specialized topics on how growth conversations can lead to additional services that are provided to exiting owners. In fact, we are expanding one of the presentations into a Spotlight guest interview for February so that all of our Members can hear these ideas. Further, Pinnacle will continue to build on this topic as it will set the stage for our Fall Conference in Boston, our next White Paper, as well as ongoing curriculum and a new chapter in the 2nd edition of Exiting Your Business (due out in the 2nd half of 2012).

In all it was a rather remarkable event as fifty (50) professional advisors networked, socialized (including cocktail receptions all three (3) evenings) and built long-lasting relationships grounded on the belief that exiting owners deserve the best possible advice for this unique need along with the idea that these advisors also would like to consider increasing the profitability of their own practices.

For those who did not attend, mark you calendar for January 30 – February 2, 2013 for our next ‘Beyond the Exit Plan’ event. Or plan to join us for our Fall Conference in Boston on October 4th & 5th, 2012. Finally, if you have not already attended a Pinnacle 2-day workshop, this may be your logical next step in incorporating exit planning into your practice.

We hope you found this newsletter helpful and we look forward to continuing to provide you with timely and relevant information to assist you with your exit planning practice.

Regards,

John

Posted in Exit Planning, Exit Planning Tips for Advisors | Leave a comment

How Pinnacle’s Certified Business Exit Consultant™(CBEC™) Helped Advance Our Emerging Industry

Posted on December 4, 2011 by admin

I hold the firm belief that the exit planning industry is poised for sharp growth in the near future. I’ve felt this way for some time. Again, the concept is very simple. Why would a business owner who has worked for decades at running and growing their privately-held business not want to be prepared for the largest financial and emotional transaction of their lives? It just doesn’t make sense that with the millions of baby boomer owners coming into retirement that they would attempt, as a whole, to handle this process and transaction themselves. The same theory was true for personal investing – empowered by the emergence of the mutual fund industry – which drove the growth of that business throughout the 1990s and into the new century.

Last week I had a sold-out group of advisors and consultants – as well as one (1) former business owner – learn all that I could teach in five (5) straight days about success in this emerging space. Pinnacle’s Certified Business Exit Consultant™ curriculum was also complemented by nine (9) professional speakers, many of whom were the authors of the six (6) textbooks and a white paper that were part of the required reading for the course (note also that all attendees were required to complete our 2-day workshop curriculum as well in order to satisfy the prerequisite requirements). Further, five (5) of Pinnacle’s CBEC™ holders lead a panel discussion on our final day together to provide insights as to how they too went through the training and were able to successfully and profitably incorporate exit planning into their practices.

How Our Exit Planning Industry is Forming

At Pinnacle we hold a certain belief to be true – that to be aligned with our core value of ‘excellence’ requires a commitment to this new, emerging space. We ask for commitments from our CBEC™ attendees and we make large commitments to them to be their partner in their success. Last week’s CBEC™ class made that commitment and Pinnacle is committed to their success as well.

To be committed to someone’s success means that you have resources, tools, and support to help that person achieve a goal. These twelve advisors and consultants who participated in our week-long certification class will go on to deliver the exit planning service to owners. And, as a community, they will inspire others to see that investing in exit planning education, marketing, branding and delivery of the service is a wise investment.

In my opinion, our exit planning industry is forming because the commitments of a relatively few people are producing extraordinary results for their practices, inspiring others to follow their lead. Those advisors joined me last week to help take our exit planning business to the next level.

The CBEC™ Designation Certification

Pinnacle’s sold-out class studied, learned, networked and contributed to each other’s learning and developed friendships and business partnerships while sacrificing their time and money to be with us for the week. Beyond that, these CBEC™ attendees are still candidates for receiving the mark because they are required to write an exit plan for an actual business owner before the designation is granted. This is a very high bar that we set for our emerging industry. However, it is illogical, in my opinion, that someone would come into a challenging course, such as the CBEC™, without an intention to monetize this opportunity by delivering the service into the marketplace. By requiring that our CBEC™ holders do so, we believe that we are aligning with the right advisors and advancing our industry forward in a big way.

Confidence for Business Owners

The rationale behind requiring that a CBEC™ candidate write an exit plan for an actual owner is simple – the marketplace needs advisors and consultants who can deliver the service, not simply more educated advisors. What Pinnacle is on a path to achieving with our Certified Business Exit Consultants™ is establishing a premier brand with business owners who will choose to work with an advisor who holds the CBEC™ mark because that advisor will have received top-notch training while also demonstrating a competency in delivering the solution to other owners. In other words, for a transaction and decision of this magnitude, we can anticipate that owners will not proactively choose to work with an advisor who has never done this type of work before.

In order to grow our emerging industry, we need to say to the business owner marketplace that we not only have a proven process for assisting you with your exit planning needs, but we also have experienced Certified Business Exit Consultants™ who have done this work for other owners and are supported by a national company that is a thought leader which has worked with hundreds of owners just like you.

Concluding Thoughts

For the past five (5) years, it has been my distinct pleasure to be an active participant in empowering advisors to achieve new levels of success with their practices through our Pinnacle programs. We have a big agenda for 2012 to assist more of our Members in achieving outstanding results for their businesses. And, if you are just getting started with exit planning and your training in this area, I encourage you to attend one of our upcoming 2-day workshops where you can learn the basics of Pinnacle proven 6-step exit planning process and then begin to incorporate this into your business as well. Perhaps in a short amount of time, you too will apply for the next CBEC™ class (classes are being held in March, June and November of 2012) and making a material contribution to our emerging industry.

Have a look at Pinnacle’s new website for our upcoming events, workshops, conferences and chapter meetings.

I hope you enjoy this holiday season and I looking forward to seeing you soon.

Regards,

John

Posted in Uncategorized | Leave a comment

How the Pinnacle Exit Planning Conference Helped Advance our Emerging Industry

Posted on November 3, 2011 by admin

How the Pinnacle Exit Planning Conference Helped Advance our Emerging Industry

To be in the exit planning industry today is to be a part of an emerging practice area premised on the idea that business owners, after a lifetime of hard work and wealth accumulation within their businesses, are well served in planning for the eventual exit from their business. Since this is a ‘planning-based’ exercise, it conveniently welcomes all types of advisors who work with business owners – whether or not you have a formal background in ‘planning’. In fact, exit planning is further broadened by the overlapping concepts of both business planning and personal planning. When we add to this the unique features of privately-held, illiquid business interests and how they can be monetized and transferred, we see that we have a broad practice area with an addressable market of business owners that number in the millions. With the most compelling statistic of trillions of dollars of illiquid wealth set to transfer with the Baby Boomer generation, we find some very exciting reasons to be involved in the exit planning world.

In light of these compelling statistics, advisors often ask themselves how they can get more involved. After all, most advisors are very happy with their current businesses and they are not interested in a large commitment and a wholesale change to their practice. At Pinnacle, we do our best to have a ‘large tent’ that welcomes all advisors who have an interest in learning and networking with each other to better serve the business owner marketplace – hence our 2011 Exit Planning Conference in Boston.

For me, one of the greatest takeaways from the Conference was the coalescence around our new exit planning concept. Let me be more specific.

Our day started with initial introductions (a Pinnacle tradition) and then we moved straight to a panel discussion that included four (4) of our Certified Business Exit Consultants. The panel was our lead-off ‘presentation’ because we wanted to be honest about the opportunities around exit planning and we asked the panelists to discuss both the positive and negatives that accompanied putting exit planning into their practices. This lively discussion lead to the realization that exit planning is a real business with real people getting real results. Our coming together began there.

At Pinnacle we provide a healthy combination of ‘practice management’ and ‘technical’ concepts for our Members learning experience. Therefore, following our panel discussion was a presentation of Employee Stock Ownership Planning (ESOP) concepts that relate to virtually any exit planning conversation. Richard Glassman concluded his talk with ESOP strategies that tied into our lunch-time, group exit planning case study.

We finished the morning sessions with break-out presentations from three (3) highly accomplished speakers:

1. Scott Hamilton & Kyle Hafstad from InKnowVision on High
Net Worth Planning
2. Alan Rose from Yarmouth Venture Group on the Micro
Markets, and
3. Karla Valas & Ryan Boland from Fidelity Charitable on
gifting illiquid stock to charity as part of an exit transaction.

Our working lunch session had all of our attendees examining an exit planning case study together. Our chapter leaders from around the country lead each table’s case study discussion and reported on each table’s ‘solutions’ for the case. And hearing all of the different solutions and concepts presented all of our attendees could learn from each other and more clearly see what a complex engagement an exit plan can be.

Right after lunch we honored Kevin Kennedy from Beacon Exit Planning with Pinnacle’s Annual Excellence in Exit Planning Achievement Award. Kevin’s exit planning accomplishments have been significant. However, we honored quite a bit more than exit planning success. In fact, we honored Kevin’s courage, as a former business owner with more than 200 employees, who sold his company to his management team and then came into our advisory world to take a new role as a leader. Kevin’s business model has set a new path to our Certification program and the development of our Certified Business Exit Mentor program.

Immediately following Kevin’s award, we welcomed Tom Deans, author of Every Family’s Business to our stage to provide our audience with a very special keynote presentation about the transfer of privately-held businesses. In fact, Tom’s message goes way beyond the transfer of family businesses and has an important message for all exit planners. Tom’s engaging and thought-provoking message and presentation style left all attendees with quite a few nuggets of wisdom to add to their understanding of the transfer of a privately-held business.

After Tom’s presentation, our afternoon session included break-out presentations by:

1. David Gagnon, Captive Insurance Strategies, and
2. Dan Prisciotta, author of Defend Your Wealth

Our exciting day concluded with a $1,000 raffle winner and closing comments which included an invitation to join us next October 4th & 5th for Pinnacle’s 2012 Annual Exit Planning Conference in Boston.

Beyond the Exit Plan
As a final note, I want to also share some ‘inside information’ from our Member-only meeting that occurred on Thursday, October 6th, the day prior to our full day conference. At that meeting, I was able to summarize where Pinnacle has brought value to the marketplace and where our fast growth has had a positive impact. I also laid out our 2012 agenda, the foundation of which is partnering with our Members in prospecting business owners for exit planning engagements.

The first step in our 2012 agenda, however, is a special training session that was voted on by our Membership. On January 19th through the 21st, Pinnacle Equity Solutions will host a first-of-its-kind ‘Beyond the Exit Plan’ training session in Orlando, Florida. At this 2 1/2 day event, we will teach the special practice areas of:

1. Mergers and Acquisitions
2. Wealth Management, and
3. Insurance planning and products

These ‘big three (3)’ practice areas are critical to your exiting owner successfully exiting their business and protecting their wealth. And, because exit planning draws advisors from so many different disciplines, we recognize that many have not received formal training in many of these areas. A better understanding of these three (3) topics will benefit our emerging industry while helping you to improve the profitability of your business.

For more details about this exciting, new event, visit www.beyondtheexitplan.com for information and registration details. It’s going to be a great 2 1/2 days and may prove to be the ideal way to kick-start your New Year.

I hope you found this newsletter valuable to your practice and I look forward to seeing you in Orlando.

Regards,

John

Posted in Exit Planning Tips for Advisors | Leave a comment

Collaboration is Core to An Exit Planning Engagement

Posted on September 23, 2011 by admin

Collaboration is Core to An Exit Planning Engagement

Today’s Heading for the Exit newsletter continues with a series of discussion points that surround what is ‘core’ to an exit planning engagement. As this emerging industry grows from its infancy it is important to begin to determine what are the most important aspects of exit planning – those that define excellence in this new and great profession.

We started with the idea that ‘education’ is core to an exit plan – the basic idea is that owners do not know what they do not know and they need reliable information to make well-informed decisions about the largest financial transaction of their lives.
Next, we stated the ‘creativity’ is core to an exit planning engagement. This simply means that exit planning is not a ‘math problem’. There are human dynamics that surround an owner’s decision to exit and those who offer this service must understand and relate to this personalized decision-making process to truly help owners with comprehensive planning for their exit.
After ‘education’ and ‘creativity’ we discussed the critical component of ‘objectivity’ being core to an exit planning engagement. The basic idea here is that an owner’s goals need to come first, not the advisor’s goals to sell their product or service. When done properly, the advisor earns the trust of the owner and then easily wins their share of the implementation work.

And today we are discussing the fact that ‘collaboration’ is core to an exit planning engagement.

What is Collaboration

Collaboration is simply the willingness to rise above the predisposition that a client relationship is your (the advisor’s) protected property and that ideas need to come only from you. Advisors who think and act in a ‘closed’ manner are not open to allowing other professionals to engage their business owner clients in dialogue that goes beyond their understanding. As a result of refusing to collaborate, advisors choke off the resources that are available to the owner and they selfishly work only to protect their own interests in not having the owner exposed to ideas and information that help that owner make a truly well-informed decision.

Why Advisors Don’t Collaborate

One of the best examples that I can think of that reflects one advisor’s thinking on being a protectionist is illustrated in a conversation that we had about introducing the exit planning idea to this advisor’s vast group of privately-held business owners. This advisor did not understand what exit planning was so he assumed that it was just helping owners sell their businesses. Since this advisor stood to lose the business owner client relationship after the sale of the business, his candid response to my suggestion that his business owners would be well served with learning about exit planning to meet their personal and business goals was “ Yes, but why would I put a knife to my own throat?”.

Simply said, this advisor was stating that his objective of maintaining the client relationship the way that best suited his needs was infinitely more important than actually delivering valuable information to the owner that could assist with helping that owner with a critical, life-changing decision that could protect the owners’ wealth for generations to come. This advisor simply viewed this as a personal loss to his income stream and, moreover, was denying that the owner is going to go through this process [eventually] anyway.

Fear of losing a client is one idea of why some advisors do not collaborate. Others include:

Ego – some advisors do not want the owner learn information from someone other than them. These advisors believe that they need to be the expert.
Advisor inexperience – this means that the advisor had poor training as to how to truly serve business owner’s needs.
Laziness – some advisors might not fear that they will lose a client, but they simply do not want to work harder for the client to help them get better solutions.
Siloed Thinking – when advisors think in silos, this means that they only focus on what is directly in front of them, like horses with blinder that block periphery vision.

I believe that ‘thinking in a silo’ is the largest obstacle to advisor collaboration. Even well-intentioned and hard-working advisors are simply in a mindset that they need to deliver on their primary service and concepts such as ‘networking’ and ‘collaboration’ are not a part of their business practices (NOTE: At one point in my career I had a manager who confidently stated that ‘networking was not working’ – this is the message that was sent from management . . . stick to finding your own clients and service them by yourself – or, at best, with the firms other resources – so I personally know about advisor’s tendencies to act this way).

An Exit Planning Engagement is Comprehensive and Multi-Layered

An exit planning engagement is more than a plan writing exercise. In fact, I’ve never met an owner who wrote a check for an exit planning engagement who wasn’t thinking about the implementation phase first and foremost. What this means is that owners want to take action on their exit plans, they don’t just want to learn about their options. And, since an exit plan (at least a Pinnacle exit plan) covers such a broad array of topics, it is impossible for a single advisor to deliver on all of these solutions – collaboration must occur.

A Simple Example of Collaboration

At Pinnacle, we strongly encourage the use of an outside appraiser to develop a ‘range of values’ for an exiting owner’s business. The appraiser is the first advisor that we always need to collaborate with to get good inputs to analyze a client’s situation. This one is a little bit easy because the appraiser is technically being sub-contracted and paid for their work.

True collaboration goes a bit deeper. It involves trust. It involves the introduction of an advisor to your business owner client who can bring that owner information, ideas and, perhaps, solutions that you cannot bring. This advisor can be:

an attorney for the owner’s estate planning needs
a risk management profession to review the owner’s insurance policies and overall program,
a wealth management professional to review the owner’s financial readiness,
a business consultant to help the owner improve the value of their business and close that owner’s value gap
a mergers and acquisitions professional to bring real-time market data to an owner to assess their viability for a sale transaction

This is but a few of the other professionals that are a part of an exit planning team and it is the advisor who introduces and leads the exit planning engagement that needs to be in a position to bring in these other professionals. NOTE: we at Pinnacle believe that a written plan that organizes the owner’s thoughts on these various topics is invaluable to the process of collaboration and being effective with this form of implementation.

Why Collaboration Works

Collaboration works because it brings owners information and resources that they need while also expanding your referral network. When you collaborate you build your own business. An openness to learning about other advisor’s businesses is the starting point. When you do this effectively, you are in a position to properly refer that other advisor to your exiting owner. In doing so, you build trust with the owner and a new relationship – and perhaps a reciprocal relationship – with another advisor. Collaboration works for all parties.

Why Collaboration is Core to an Exit Planning Engagement

Any properly written exit plan will cover all aspects of an owner’s personal and business life. Exit planners will need to work with that owner’s existing advisors as well as introduce new advisors to that owner. I tell every owner that I work with that I am not going to try to replace any of their existing advisors. However, if an advisor is not up to the job or they don’t have specific expertise, I will introduce resources that do. The value that I believe that an exit planning process brings to owners is educating them, developing creative solutions, being objective, and delivering resources for proper execution – hence the need for collaboration. Only a fool would believe that they can address all of these different areas by themselves . . . collaboration is absolutely necessary.

Some Tools to Learn About Advisor Collaboration

Pinnacle’s ongoing newsletter program, practice management and spotlight guest calls, as well as our case studies address topics such as advisor collaboration in many different ways. Pinnacle Members are encouraged to review the 2011 first Quarter case study on Advisor Collaboration (this case was also discussed at our 16 networking chapter meetings around the country).

Also, collaboration will be a part of the theme of our upcoming annual conference in Boston. At this event you will meet the very advisors that you need to collaborate with for owner exits. Our event is only a few weeks away – October 6th & 7th – have a look at the details at www.pinnacleexitplanningannualconference.com.

Closing Thoughts

Consider what your business looks like today and how much you collaborate with others. Then, resolve to increase your knowledge base and continue to learn about more and better ways to serve owners by leveraging the knowledge and experience of others. To practice exit planning, one must embrace this ‘core’ concept and keep an open mind to delivering dynamic solutions to owners in a meaningful manner.

Posted in Uncategorized | Leave a comment

Objectivity is ‘core’ to Exit Planning

Posted on September 2, 2011 by admin

Objectivity is ‘core’ to Exit Planning

Today’s article is based on feedback through various social media channels regarding my last two (2) postings titled “Education is Core to Exit Planning” and “Creativity is Core to Exit Planning”. These postings/newsletters are written with the intention of sharing thoughts and insights about exit planning engagements so that professional advisors can get an inside look at the exit planning process to improve their offerings to owners. What came from these postings was a larger social media conversation relating to the idea that not only were ‘Education’ and ‘Creativity’ essential components of an exit planning engagement, but equally important was ‘objectivity’. I could not agree more, hence the third in a series of newsletters addressing the critical elements of an exit planning process and engagement.

Objectivity in Exit Planning

The concept is simple – an exit consultant needs to assist owners with defining their goals and then helping the owner to achieve those goals through creative, well-informed guidance. This process educates owners so that they are fully informed and confident that the decisions that they are making relating to the largest financial and emotional transaction of their lives is the one that will most effectively help them meet their goals (for those who do not have formal training in this area, this simply means that owners are not always best off by simply selling their business, many other factors come into play).

For example, I recently had a business owner say to me ‘a lot of our conversation has revolved around the concept of an employee stock ownership plan for our company – is that what we should do next?’ Here was my completely honest and objective answer:

“First, I don’t get paid any more or any less if you install an ESOP in your company as a part of your internal transition. So I am not teaching you about ESOPs with an eye towards selling you into taking action in that direction.

What is most important is that you learn as much as you can about the details of this option so that you can make a fully informed decision. We provided these details in your written exit plan and you need to review them and ask questions about what an ESOP would mean for your business. I will help you answer those questions (perhaps with the assistance of an ESOP specialist). Thereafter, if you conclude that an ESOP is best for your company we should move ahead.”

I felt that my answer to the owner demonstrated an example of complete objectivity. Moreover, because exit planning is a process, I pushed back on the owner who wanted me to make the decision for the next steps for his company. In truth, the ESOP will probably work very well for the situation. However, without the owner’s complete understanding of why this is the case, they will not be clear about this critical decision. Moreover, the ESOP decision is part of a larger conversation about whether or not the management team can truly run the business into the future, therefore the ESOP decision does not stand in isolation. In other words, the installation of an ESOP is, in itself, not an answer – it is a step in the process of this owner having a successful exit.

So the implementation of any solution needs to be decided upon by the owner as being best for them. And as exit consultants, we need to educate our owners and be as objective as we can be, without putting our expectations and outcome goals first in the exit planning process. Rather, by putting the owner’s goals first by presenting all possible solutions without favoring any one over another, we maintain objectivity. When we fail to act in this way, we fall victim to becoming the ‘hammer’ in the old saying ‘when all you have is a hammer, everything in the world looks like a nail’. We lean in the direction of breaching objectivity and try to manipulate our ‘education’ to serve the needs of selling our own product and service.

At this point I can hear the thoughts of hundreds and hundreds of advisors that I have personally trained over the years . . . they are saying ‘but John, what I do for a living is offer _________ (NOTE: fill in the blank with any of the following – legal services, tax services, insurance, asset management, M&A, ESOP, valuation, business consulting, etc . . .) for a living.’ So how does exit planning work for me if it does not lead to the sale of my primary service to this owner?

Aha . . . good question.

Think “Value” and Think “Trust”

The exit planning process, done properly, is one that builds an immense amount of trust between you and the owner who you are taking through this process. The reason that so much trust is being built is because you are driving value into each exit planning relationship. The value is derived from creative and objective solutions to the owner’s situation to help them see that there are options for a business exit that they likely have not thought or learned about. And, when you teach them this information and apply it to their situation, you should be doing it in a way that requires the owner to be an active participant. Therefore, in my humble opinion, one of the worst things that can be done in the early stages of an exit planning engagement is for a product or specific service to be proactively offered to the owner for purchase or implementation. “Proactively offered” means that you as the advisor have stopped educating the client for their benefit and have started the process of educating them on your specific product or service to meet your own goals.

Objectivity in an exit planning engagement requires that you ‘stay the course’. At Pinnacle what this means is that you complete steps #1-5 of our exit planning system before our final and 6th step, which is the introduction of solutions, which may or may not include products and services that you offer to assist the owner in meeting their goals.

It is the patient advisor who wins in this field because they have aligned themselves with the owner’s goals and have not short-cut the exit planning process to get to their own goals in an expedited manner. Objectivity requires a certain amount of patience. It also requires a certain amount of risk that the owner will not want or need the primary product or service for which you received your formal training (be it legal, insurance, investments, sale transactions, etc . . . ). That being said, every advisor needs to figure out how they will be compensated in their model for exit planning and design their own practices around this idea of being objective while also profitably growing your advisory practice. This likely requires quite a bit of thought and Pinnacle Members have addressed this by building advisor teams and opening separate entities to offer exit planing as a few examples.

In the end, the greatest value that you can provide an owner is to provide objective, creative, and meaningful information so that they can make a proper decision for their exit. The trust that you build will be earned and then the owners will generally be happy to give you the business for other products and services that are needed. Therefore, exit planning is not a business for an inexperienced or impatient advisor. Nor is it a business for product salespeople who do not take a holistic approach to client engagements. Rather, it is a strategic-thinking engagement for which the advisor’s outcome goal should be to [get paid, while also] driving value and building trust that leads to a long-term relationship with the business owner.

How To Know if You are Being Objective?
Given the importance of the exit planning work, I think that there is one way that you can assure that you are staying objective through the exit planning process. The test is to either ask yourself, or if you care to you can tell the owner, “it truly does not matter to me which direction you go in with your exit or which solutions you choose to implement for execution, so long as that direction and those products are aligned with you reaching your goals.”

Admittedly, when I was going through ‘training’ at the big firms for my wealth management business, no one conveyed this idea to me. Rather, I was provided sales training that empowered me to more aggressively ‘close’ business and grow my practice. My process did focus on what the client wanted, but it also advanced what I wanted (in this case it was signing forms to move their investment assets from their existing advisor to my management). Many reading this newsletter have perhaps had some of the same training. To that I would say that for the purpose of growing a wealth management business that training was very helpful. However, for exit planning, it is simply the wrong tools for this more delicate job. Today, the only competition for exit planning engagements is yourself. Over time, this will change. But if you remain objective in your approach, you will build trust and a reputation for doing ‘the right thing’ for your business owner clients. And by the time the rest of the world figures out what a great opportunity exit planning truly is, your practice will be well established, highly regarded and filled with referrals from happy owners.

Final Note: I’m grateful for the social media conversation that was stirred from my last posting which shaped the thoughts around this one. I hope that we can keep this conversation moving ahead.

Posted in Uncategorized | 1 Comment

Creativity is ‘Core’ to an Exit Planning Engagement

Posted on August 5, 2011 by admin

Creativity is ‘Core’ to an Exit Planning Engagement

After recently writing about ‘education’ being core to an exit planning engagement, I thought it would be appropriate to write a follow up article about the related and critical idea that ‘creativity’ is also core to an exit planning engagement. Without creative solutions, most owners cannot visualize their exit. Owners are often stuck in a paradigm within their businesses. The idea of an exit is often foreign to them and, although many owners think that they might enjoy selling the business one day at a very high price and then moving into retirement, the reality is that most owners will fail in this regard. Therefore, in order to have more owners succeed with their exits, we need to create other solutions that are tailored to their financial and mental readiness as well as how to solve the business issues so that they can exit without ruining the company.

Think about what type of solutions are required that addresses these multi-faceted, interconnected, complex issues.

I submitted in my last article that educating the client was ‘core’ to planning their exit. This is true. But it is equally true that ‘creativity’ is a necessary part of the process and therefore also ‘core’ to any engagement.

Creating Exit Solutions – Why Many Advisors are Not Creative
Think about this statement . . . “Most advisors lack creativity.”

Do you agree or disagree?

Does that offend you in any way?

In all likelihood it does not. I’ll use my wealth management experience as an example. I found, over many years of trial and error, that the more ‘creative’ that I tried to get with client investment portfolios, the more I was acting in contrast to solid portfolio management theory and, in some cases, confusing my clients. Looking back on it, I cannot say that any creativity that I applied to my investment selections consistently produced better returns for my clients. By contrast, sticking to industry discipline and having predictability was valued over creativity.

Said another way, wealth management, done properly, is a relatively boring business.

Do you want your tax advisor to get too creative with your returns?

Do you want your attorney to get creative with interpreting the law?

Do you want your appraiser to get creative when measuring the risk factors (and therefore the value) of your business?

In most cases, the answer is ‘no’. Why is this the case?

Why are professional advisors boring?

Left-Brained versus Right-Brained Ways of Thinking
Here it is in a nutshell . . . professional advisors are attracted to left-brained, quantitative and analytical types of thinking. Right-brained thinking, by contrast, was for the art and music majors – something that most professional advisors could not relate to because it did not translate into a reliable way to earn a living.

The upside of left-brained, analytical thinking is that clients of professional advisors get rigor, analysis, and – all things being equal – predictable results from the advice that is disseminated. If we, as professional advisors, sought to improvise every client case, we would be doing a bit of dis-service to our overall business as many clients look to their advisors for reliable advice, only occasionally seeking creative ideas.

Diatic versus Triadic Logic and Thinking – Getting Unstuck
The problem with applying only a left-brained, analytical approach to an exit is that the owner is often already locked in that mindset is counter-productive to the overall exit process. Analyzing data alone is not sufficient to create a solution.

Let me explain what this means.

Owners who are thinking about an exit are often caught in their own daily routine of running their business. The owner will analyze business opportunities and choose the ones that look most attractive. Most of these decisions are based upon the idea of growing a business and increasing their enterprise and their own personal net worth.

However, when an owner begins to think about their exit, they need some ‘out of the box’ thinking. There are two (2) primary reasons why this is the case:

1. The first reason that an owner needs to think differently about their exit is because exiting a business is an emotional, right-brained decision for most owners and not a logical, left-brained decision.

An owner’s business is often a reflection of themselves and their life’s work. It’s not the same as processing a tax return or court case or investment decision. Owners personalize what they do and become emotionally attached to their businesses. And this leads to the second reason for creative thinking around an exit.

2. The owner’s thinking is often diatic – or one dimensional. In other words, an owner will often only be considering one type of exit option as a potential solution. Like running their business, they get stuck with that one alternative and without other, creative alternatives, the owner forms judgments around their perceived approach to the exit and they get stuck.

For example, an owner may want to transfer the business to the management team but has spent years thinking that the managers cannot buy the business because they do not have the money. The owner is stuck in this thought process and this type of thinking also reinforces the hugely emotional decision by having the owner not move ahead and address the exit issues. When you extrapolate these twin problems out, you have a snapshop of most of the failed exit plans in this country, an unaddressed, emotional process compounded by incomplete information about an owner’s options leading to mental gridlock.

Applying the training – what exit options can be used to create solutions?
Recognizing that owners are stuck is the first and most important step. The answer is to provide creative solutions for that owner’s exit.

For example, in an emergency situation, rescuers are trained to get people thinking about something other than the impending perils. Fear can paralyze people, both consciously and unconsciously. People with a fear of heights will often tell themselves ‘don’t look down’ as a way of coping with their concern over being high off the ground.

An owner is no different with their exit. They are often stuck and it is creativity that gets the right-brain engaged in the process and gets the owner’s thinking engaged and moving ahead.

Why Owners Advance When You Present New and Creative Ideas
Let’s looks at the management buy-out example from before. An exit planner who presents an idea such as an Employee Stock Ownership Plan to an exiting owner who has never heard of that option before is in a position to get the owner unstuck from their current way of thinking. New and creative ideas become the lifeblood of successful exit plans because they help the owner see the possibilities of what can be achieved with their exit. And, because every exit is a complex mix of business and personal considerations, creativity is required to address both the left-brained and right-brained issues.

As my friend Bruce Wright is fond of saying, a ‘whole-brained’ approach (one that engages both the left brain and the right brain) is much better than a ‘half-brained’ approach . . . Bruce has such a great sense of humor.

Are you taking a ‘half-brained’ approach to your exit planning by only analyzing and not creating solutions for your owners? If so, you can substantially increase the results that you are getting by recognizing that creativity truly is a core part of exit planning.

Concluding Thoughts
I hope that this is helpful to your thinking about what you offer to business owners who have a need for this unique service. The exit planning industry is in need of advisors who are ready to teach owners. Education is the great equalizer. However, exit planners also need to be creative with owners who are stuck. Education alone is not sufficient. It was once said that ‘knowledge alone does not equal power’. Rather it is ‘the effective application of knowledge that brings powerful solutions’. To that I would add that ‘it is the creative application of exit planning knowledge that brings consistent solutions to exiting owners.’

When owners make fully-informed decisions based on creative solutions, they move confidently towards their goals and we are in a privileged position to be their guide on this journey towards their exit.

If you are interested in being more educated and learning more creative solutions for exiting owners, I recommend that you look into our upcoming 2-day workshops, our Boston Exit Planning Conference and / or our Certification class in November to determine how you will bring these solutions to your baby boomer clients.

Wishing you all the best,

John.

Posted in Exit Planning, Exit Planning Tips for Advisors | 1 Comment

Announcing Pinnacle’s Fall Exit Planning Conference

Posted on July 11, 2011 by admin

Announcing Pinnacle’s Fall Exit Planning Conference in Boston, MA

October 6th & 7th, 2011

I am very pleased to announce that Pinnacle Equity Solutions is hosting a Fall Exit Planning Conference in Boston, MA on October 6th & 7th. After a very successful exit planning conference this past January in New Orleans, Pinnacle has decided to host a Fall conference to continue our positive momentum forward and to further connect and inform the growing networking of professional advisors who are joining the fast-growing exit planning community.

There is no doubt that exit planning is rapidly being adopted as a new form of advanced planning for business owners. With 12 million Baby Boomer business owners heading towards retirement and a recovering economy, the exit planning industry is ripe for fast expansion and large opportunities for all who participate.

In the past four (4) years, Pinnacle Equity Solutions has emerged as a clear leader in the field of advisor training and exit planning design and solutions for owners. With our proprietary 6-step exit planning system, we are empowering more and more advisors with the language, tools, deliverables, content, and ongoing support to bring this unique service to exiting owners across the United States.

What has emerged from our fast growing, 115+ Member organization is a solid network of advisors who are forming teams and collaborating on exit planning engagements, earning money together and bringing more dynamic and better coordinated solutions to the exiting owners in need.

Pinnacle’s Exit Planning Conference
Pinnacle’s Fall Exit Planning Conference is your opportunity to meet and network with these advisors as well as to listen to more than a dozen exit planning experts, authors, speakers, and practitioners who are incorporating exit planning into their businesses and leading this emerging industry.

The Boston location is the ideal spot for this next gathering of exit planners. We have a day and a half of meetings and educational presentations, including a welcome cocktail reception for all attendees on Thursday, October 6th.

We have created a webpage to provide all of the important details regarding this conference. We invite you to review the page at the link below and to mark your calendar for this exciting event. Kindly note that there is an early-bird special with limited seating for a sight-seeing trolley ride around Boston after the cocktail reception on Thursday evening. Book early to get all of the additional benefits of that this conference has to offer.

Visit our Exit Planning Conference Website for more information and to register today.

Pinnacle’s Exit Planning Annual Conference

On behalf of Pinnacle Equity Solutions, I welcome you to join us and to participate in this exciting new venture and I look forward to seeing you at the Boston event.

Warm regards,

John.

Posted in Exit Planning | Leave a comment

Education is ‘Core’ to an Exit Planning Engagement

Posted on June 14, 2011 by admin

Education is ‘Core’ to an Exit Planning Engagement

After recently writing about what exit planning is and what it is not, and then furthering those thoughts with my ideas around exit planning credibility and how to attain it, I want to advance this line of thinking with the idea that educating a business owner through the exit planning process is ‘core’ to any exit planning engagement. Without a process for educating an owner, it is impossible for the owner to make a fully informed decision for their own exit. And, without the ability of an owner to decide for themselves which exit option to choose and to understand the pros and cons of each choice, it is unlikely that baby boomer owners will consistently achieve successful exits. In fact, I believe that the rise in popularity in ‘exit planning’ is mostly about a new paradigm for approaching an owner with the largest financial and ‘mental’ emotional decision of their lives.

Let’s take a look at the educational process that accompanies a properly-delivered exit planning engagement.

Expert Advisor versus Process Consultant
The first and most important point that can be made on this topic of educating owners is to differentiate an ‘expert advisor’ from a ‘process consultant’. At Pinnacle, we teach this point on the morning of the first day of our workshops. In my book, it is the opening of the first chapter. ‘Exiting a Business is a process, not an event’. No matter how many times I utter those words, they continue to ring with the same level of importance as the first time that I said them. For advisors who are looking to deliver an ‘educational, exit planning process’ to business owners, here is what this means.

An owner does not need you to tell them what to do with their exit. That owner needs you to ask the right questions so that they can figure out what they need to do to have an exit that means success for them. This is a critically important point so let’s draw a few examples to put it in perspective.

Your accountant does not need to educate you on the tax laws in order to have you file a proper return. Now, I would submit to you that a well-informed tax-payer is a better prepared tax-payer, but, nonetheless, it is not necessary that the accountant educate the client. The right boxes need to be filled out and the rules need to be followed.

Your attorney does not need to educate you on the law and on a legal process when you engage them for work. In fact, because attorneys charge by the hour, it is often more cost effective to let them continue to keep the knowledge and to simply work more efficiently to process that work that you have together to keep the overall talking time and subsequent invoices reduced.

Now, exit planning is not the same as tax and legal advice. In fact, it is just the opposite. You see, in those areas, the advisors are taking their clients through a more structured process with certain rules and regulations. The rules and regulations are learned as part of the advisor’s trade and applied to the individual client’s situations.

With exit planning, there is a different process. Here the rules are very different. And, the end result that an owner gets is mostly driven by what that owner wants most out of their exit. Again, tax and legal processes are not driven so much by the owner’s desires but an exit planning process is entirely driven by an owner’s desires and goals. And, if an exit planner does not ask the right questions to get to that owner’s goals, the results will not be consistent. The process breaks down right from the beginning. Understand that you need to first seek the direction that the owner wants to head in and then provide a framework in which to provide additional information.

Dispelling the ‘Sell Your Business’ Myth
Before moving on to how to apply this education, it is first important to emphasize an important point with exit planning. Exit planning does not mean that an owner is going to sell their business and will be educated on the sales process. This may be a part of the exit planning process but it is not the primary focus. Because the words ‘exit planning’ are generally interpreted by the owners as ‘selling’ the business, it is up to each advisor to market and explain these differences so that owners can see that an objective process is being offered that assists owners with getting what they want from their exit, which is not always that highest price that someone else will pay for the business.

For better or for worse, most advisors will need to overcome a lot of preconceived notions that owners have around the term ‘exit planning’. One day when ‘exit planning’ is better recognized in the marketplace this will change. However, the ‘sales process’ today can be difficult if you cannot articulate these differences to business owners.

The Exit Planning Differentiator
Therefore, the largest differentiator that you can bring to business owners – and also where the greatest opportunity is to add value – is in the educational process. The process of teaching an owner what they do not know is critically important to this process. In fact, let me borrow a few lines from my friend and fellow Pinnacle Member, Dan Williams. Dan tells owners that there are three (3) levels of knowledge:

1. There are things that we know – this is an easy one.
2. There are things that we know that we don’t know

For example, I know that I don’t know how to speak Chinese. This is obvious to me because when I witness people speaking Chinese I have no idea what they are saying.

Finally, and #3, there are those things that we don’t know that we don’t know. Dan calls these things ‘blind spots’. And, when an owner goes through an exit planning process, they are surrounded by ‘blind spots’. And it is these blind spots, the areas where owners have no idea of what they need to know and are absolutely clueless about, that are critical to their success with an exit.

Again, let’s take an example. An owner may have no idea what an Employee Stock Ownership Plan (ESOP) is. They have no idea of the potential benefits of this type of transaction for their business. That owner goes ahead and sells their business without ever finding out about the ESOP option. And, years later, they discover that they could have benefited greatly from this structure and wonder why none of their advisors ever even mentioned it.

Better yet, an owner of a ‘C’ corporation is offered an ‘asset’ purchase for their business and heads down the path of selling to the buyer because they like the price. This owner has no idea that the taxes on this transaction – without some preventative measures – are likely to exceed 50% of the selling price and, in all likelihood, kill the transaction. Owners fall into this category all of the time.

Finally, there is the owner who has no idea that insurance policies titled in their name will count in their gross estate, potentially exposing their estates (and families) to millions of dollars in surplus taxes. Or that same owner will have no idea that a non-compete agreement means that they are literally not allowed to re-enter the trade in which they identify most with for years and years after their transaction.

These blind spots are killers of successful exits. Education is the answer.

Education is ‘Core’
When an advisor brings an owner through an educational process with an exit plan, these issues are raised along the way. The owner has the time and the opportunity to learn about these various issues and begin to make additional plans to properly and successfully exit their business and protect their wealth. In this case, it is critical that an owner be made aware of these technical and emotional issues far in advance of a transaction.

A transactional advisor recently stated that the last thing they want their owners to ask about is whether or not the sale of their business will yield them enough after-fee, after-tax proceeds to meet their lifestyle. There is only one reason for not wanting this selling owner to be educated – because that advisor is not concerned about the owner discovering their blind spots and choosing another way to exit their business.

With proper exit planning, it is paramount that an owner first know whether or not their exit transaction will meet their needs, even if this realization means delaying any transaction until the business can grow to a point of being able to support this owner’s lifestyle post-exit.

You see, without proper education and a process that applies and organizes the teachings, it is difficult, if not impossible, to see where owners will achieve consistently good results.

What Advisors Need to be Educators
So, in order to be a successful exit planner, I submit that you first must be a good teacher. Often-times I see this come through someone’s passion for exit planning. This means that one does not necessarily need to have solid teaching skills, so long as they truly believe that it is of utmost importance that a business owner learn what they need to know about achieving a successful exit.

Concluding Thoughts
Here’s the hard part for advisors.

First, we were not taught exit planning in our formal education.

Next, we tend to approach clients from an ‘expert advisor’ role.

Both of these short-comings are easily overcome if you first educate yourself on exit planning and then approach the marketplace with the idea that you need to first teach others in order to truly help them.

I hope that this is helpful to your thinking about what you offer to business owners who have a need for this unique service. The exit planning industry is in need of advisors who are ready to teach owners. Education is the great equalizer. When owners make fully-informed decisions, they move confidently towards their goals and we are in a privileged position to be their guide on this journey towards their exit.

Wishing you all the best,

John.

Posted in Exit Planning Tips for Advisors | Leave a comment

Exit Planning Credibility

Posted on May 24, 2011 by admin

Exit Planning Credibility

After recently writing about what exit planning is and what it is not, I wanted to advance that thought with another related one – what gives an advisor ‘exit planning credibility’? Once again, we are all building this emerging exit planning profession together so there is no final say or conclusive answers, only good questions. Therefore, today’s question is ‘what gives you exit planning credibility?’

It is important to begin answering this question with the reality that the marketplace of business owners cannot easily discern what the term ‘exit planning’ means, and, more importantly, what the words mean to them, their business and their future. ‘Exit Planning’ is a confusing term and many advisors add to that confusion by liberally posting ‘exit planning services’ on their websites and business cards – this was addressed in my last article, ‘But I Already Do Exit Planning’. There are many advisors offering ‘exit planning’ services and claiming thought leadership, experience, etc. . . So, since we last took a look at what exit planning is not, and compared that to what exit planning is, let’s now take a look at this from the standpoint of why an owner would hire you as an exit planner.

My experience tells me that you cannot go very far with exit planning if a business owner does not believe that your offering to them is credible. Remember that this is the most important financial (and emotional) process and transaction of most owner’s lives. When an owner is approached with the prospect of planning for their exit, they are consciously and subconsciously sizing up an advisor’s ability to deliver for them. Therefore, I submit that for your exit planning business to be successful you need to establish a high level of credibility.

In order to encapsulate a very broad and quite subjective topic, let me offer a structure that ranks a number of different areas of exit planning. I’ll use a four (4) point system, with (4) out of (4) being the highest and (1) our of (4) being the lowest, to determine what gives an exit planner credibility.

Ranking Your Exit Planning Credibility

Credibility Rank 4 out of 4:

If you can say to an owner the following, I believe that you have the highest level of credibility:

“I’ve successfully exited a number of businesses and made mistakes with each one. These are the mistakes that you – the owner – are likely about to make with your exit. Because I’ve sat in your shoes and made the decisions that you are about to make, it is clear that I’ve had the success that you have. And, what I chose to do with my talent, experience and passion is build a business that will help you to avoid the mistakes that I made and to help you achieve a successful exit from your business by guiding you through a process that hundreds of others have used that will drive the result that you most desire, whatever that may be for you. Where my skills and knowlege are lacking in terms of taxes, deal structuring, legal agreements and working with your existing and new advisors, I have built a team around me with experience in all of these areas and deep knowledge of the exit planning process that we will use so that our overall service that helps you to achieve your ultimate exit will be coordinated, professional and at a reasonable price to you.

You – the exiting owner – need to be an active participant in this process or it won’t work. Moreover, once I’ve determined that you are not committed to the process, I’ll be the first one to disengage from our relationship as the process will not be effective without your active input. If you do participate, I’ll stay with you, I’ll continually coach and educate you and I will marshal all of the resources that we need to get you to your business and personal goals.”

Now, that’s credibility!

Here’s the problem. Exit planning today is mostly being offered by professional advisors who, generally speaking are challenged in relating directly to the struggles that a business owner faced with twenty (20) or more years of making payroll, going through a number of recessions, hiring people and then firing them, building a company from scratch, and the countless – thousands upon thousands – of decisions that the owner had to make to build their successful business. Therefore, unless you’ve been there and had the actual experience that the owner is about to face, it will be difficult for you to reach this level of credibility.

TWO IMPORTANT NOTES:
Keep an eye on what Pinnacle is doing as our next phase of build-out to identify and match owners who have been through an exit with our trained and certified professional advisors. I’m excited about this next phase of growth for Pinnacle.

A second an important note comes from my exit planning cases. What I tell an owner when the engage me for an exit planning assignment is that ‘I can only take them as far as I have been’. Even though I sold a wealth management business that I built from scratch, that experience alone is not the same as building a 100 employee company and making decisions on how to exit that business. I tell that to all owners who engage me as to where my limitations are. And, no matter how many owners I’ve helped get successful exits, I do not currently have the direct experience that these owners will face. More importantly, I do not pretend to have it and I tell the business owner that is where I will quarterback more resources. However, I do tell them that if they do not actively participate in the process, I will, in effect, fire them because my coaching and consulting experience in this area tells me that I cannot help them get what they want if they do not want it for themselves. I also happen to know that only a small number of owners who have gone through an exit are in the business of helping other owners with this process. Exit Planning, therefore, is mostly the work of professional advisors, which is why Pinnacle is in the training business to professional advisors – to achieve our overall objective of seeing owners achieve successful exits.

So, if you are a professional advisor or consultant to business owners and you have not yet been through an exit yourself, does this mean that you cannot have a meaningful, impactful, and profitable exit planning practice? Absolutely not. It simply means that you need to work towards the next highest level of credibility which is below:

Credibility Ranking 3 out of 4 (Part I):

If you can say the following to a business owner then I believe that you have the highest credibility ranking as a professional advisor who has not been a business owner that has successfully exited.

“As an experienced advisor there are many ways that I can serve clients and the marketplace. I chose to do exit planning (as part of or as all of my practice) because I believe in the process and the results that I can get for an owner if they hire me. In fact, I’ve helped numerous owners through the process to acheive a successful exit and I’m confident that I can do the same for you.

Because exit planning is a new field, I have sought out the thought leaders in the marketplace and have aligned with them to bring knowledge and resources to myself and to my exiting owners. I am a lifetime learner who recognizes that exit planning is a broad field of study that covers many, many practice areas that I need to understand to be continually more effective with my exiting owners. Therefore, I’ve invested time, money and resources into establishing exit planning as a core part of my practice and made the conscious decision to assist owners like you in achieving their goals.

I use a process that has worked for hundreds of owners just like you to achieve a great result with their exit. This process is supported by an organization committed only to this business. Therefore, I have the knoweldge, tools, network and support to not only help you analyze your exit planning options and which path is best for you, but to also help you to achieve those goals.

I will commit to guiding you through this process and constantly educating you so that you are comfortable with the exit decision that you make. I will provide comprehensive and objective advice throughout the process. And, where needed, I will bring in resources to solve problems that arise. If I do not know an answer to a question I will tell you and I will get the answer right away from my support and network. Although I have not achieved the form of success that you have in running and growing a successful enterprise, I am myself a small business owner within my practice and I can relate to many of the issues that you face.

As a professional I get paid for the work that I do. What I charge you will always be fully disclosed to you as will my relationships with other service providers that I may introduce to you. You will have a complete understanding of all of the costs associated with your exit to the best that I can help you to estimate them. And, when the process is complete and you have achieved a successful exit, you will have confidence that we left no stone unturned in helping you reach your decision and achieve your goals.”

Now that is advisor credibility!

So, you may ask, what if I already enjoy my practice as it is but I want to help owners without being responsible for the outcome from their engagements? Moreover, I don’t have the time to start, in effect, a whole new business. Well, a good number of Pinnacle’s Members fit this description as well. They have invested in their exit planning training, tools, and support but are not looking to quarterback the engagements for owners. I do not think that this takes any professional credibility away from these advisors – in fact their credibility is enhanced because of their additional committment to a higher-value service. This service simply needs to be positioned properly so an owner understands what they are getting.

I offer the next level of credibility below:

Credibility Ranking 3 out of 4 (Part II):

If you can say the following to a business owner then I believe that you have a solid level of credibility but chose not to be the quarterback for this owner’s exit planning needs.

“As an experienced advisor, there are many areas where I can serve the marketplace, however, I chose to participate in the exit planning space in a number of ways but I don’t want to lead the process for you. What this means is that I have read a number of books, have been through a high-level training course, I have support for my exit planning practice, and I have built a network of other advisors who can support my efforts in helping you achieve your exit goals. However, when it is time for your exit plan to be written or for your exit planning execution and transaction needs to be met, I participate in this process by introducing highly experienced resources to you. By building my practice in this manner I can stay involved with the exit planning space without extending my practice towards leading this engagement for you.

As a dedicated professional, getting results for my owners is important to me and my reputation. Therefore, when I identify a business owner who has a need for exit planning services, I reach out to this network of trained and certified exit planners to match the owner’s needs with those that I think can do the best job. I participate in this process through my area of advisory focus, working with the exit planners to help in delivering a coordinated solution that is grounded in the exit planning process and which includes my unique offerings but does not have me leading the engagement.

If you – the owner – would like to move ahead with your exit, I will reach out to these professionals for a detailed conversation and, potentially, a written plan for your exit. My practice is not structured to lead this engagement but I’ll be an active participant while staying focused on my core area of advisory services.”

——

I believe that this group of advisors is one of the fastest growing segments of the exit planning industry. Many of these advisors want to be ‘participating’ advisors and not ‘quarterbacks’ for exit planning engagements. I believe that this is very good for the industry so long as these advisors have gone through some level of training and have some support to help deliver solutions to the exiting owner.

And we finally arrive at the bottom of the credibility rankings

Credibility Ranking 1 out of 4

Let start with what I think is not advisor credibility.

I don’t think credibility in this area lies simply in having ‘exit planning’ on your website and/or business card. And I also don’t think that credibility comes from simply being ‘certified’ to do exit planning. These self-promotions are only adding to your credibility if you have a commitment to the exit planning marketplace and some level of experience in helping an owner. Titles and certifications are only relevant if they reflect what you actually do.

Beyond that, I think that advisors contribute to ‘exit planning’ confusion amongst owners when they.

Use ‘exit planning’ as a ‘door opener’ to business owners so that their product is sold and they move on. In this case, an initial meeting with owner may be on the topic of ‘exit planning’ but then the conversation turns to product sale and the advisor disappears.
Also, since ‘exit planning’ was not a course at college or our advanced educations, I believe that an advisor who does not have any exit planning training or support but continues to offer ‘exit planning’ to the marketplace of owners also has a low level of credibility. Let’s face it, if you cannot sacrifice two (2) days of your life and a few hundred dollars to attend a workshop, how qualified are you to assist an owner with the largest financial transaction of their lives?
Finally, some organizations lay claims to ‘exit planning’ expertise. When you get past the fact that ‘exit planning’ is in the title of their name (or their LinkedIN groups) you see that there is relatively little leadership or commitment to helping owners get actual results. In an emerging industry this is bound to happen but it is not credible if it cannot deliver.

Concluding Thoughts

I hope that this full-bodied explaination of exit planning credibility is helpful to your thinking about what you offer to business owners who have a need for this unique service. Building this emerging industry is a bit like rolling a boulder up a hill. However, if you listen carefully, there are more and more professionals ‘beating the exit planning drum’. As advisors, let’s work together to help each other deliver credible solutions to the marketplace of owners. If we do that, this industry will have credibility and that will bring great results to all who participate in the ‘exit planning movement’.

Wishing you all the best,

John

Posted in Exit Planning Tips for Advisors | 1 Comment

Pinnacle Equity Solutions – Exit Planning

Mastering the Exit Planning Conversation (with Business Owners)

Beyond The Exit Plan – Event Review & Discussion

How Pinnacle’s Certified Business Exit Consultant™(CBEC™) Helped Advance Our Emerging Industry

How the Pinnacle Exit Planning Conference Helped Advance our Emerging Industry

Collaboration is Core to An Exit Planning Engagement

Objectivity is ‘core’ to Exit Planning

Creativity is ‘Core’ to an Exit Planning Engagement

Announcing Pinnacle’s Fall Exit Planning Conference

Education is ‘Core’ to an Exit Planning Engagement

Exit Planning Credibility

Recent Posts

Recent Comments

Archives

Categories

Meta