A couple of years ago, I started to notice a trend: Some advisors I work with were having significant – but sporadic – success with business owners who were exiting their business. These advisors were knocking down the occasional $15 million to $20 million opportunity, but had no formal method for delivering this service or recreating their success with other clients.
Then, one of my coaching members introduced me to Exit Planning Institute. EPI offers the Certified Exit Planning Advisor (CEPA) designation, which provides financial advisors and other professionals insight and a programmatic approach to facilitating business owner transitions. I’ve been helping advisors assess this opportunity and determine if they want to integrate transition consulting into their own service offering.
Not only is this an underserved market, but one of the exciting aspects of this business development model is that grizzled veterans who have been advisors for decades are able to leverage existing knowledge, experience and strengths and apply them to something fresh and new.
One advisor said to me: “I’ve been doing this for over 30 years. I love what I do, but if I could make it fresh, or different, or more engaging for me, that would be very welcome!” Some have even gone so far as to make this service the primary focus of new business development activity.
Could there be an opportunity for you to develop your own exit planning practice? That depends.
Is This a Right Fit for You?
The CEPA designation is definitely not for everybody. To be successful here, you must have expertise in advanced topics that may be on the periphery for advisors who are more comfortable with clients in the $500,000 to $5 million range – the so-called millionaire next door.
These are truly consulting engagements with a healthy dose of project management. Engagements are often characterized by the following:
- They’re typically long-term.
- There’s a definite process through which business owners must be guided.
- It involves strategic planning and risk mitigation.
- You may have to overcome owners’ antagonism toward traditional investments.
- You must manage milestones and decision points that can affect many people.
- You will be required to lead a team of other professionals.
The Exit Planning Institute has developed a framework to guide business owner transitions, which starts with a formal valuation – or at least an indication of value. Then, typically three potential gaps are addressed:
- The profit gap (the difference between best-in-class EBITDA and the client’s),
- The value gap (the difference between best-in-class multiples and the client’s),
- And the wealth gap (the difference between what the client needs to maintain their lifestyle after they exit the business versus what they have on hand).
The Business Case and Bringing the Strategy to Life
So, how do you profit from this unique service offering? Revenue streams include the following:
- Ongoing planning fees to perform the assessments and implement the plan
- Key person insurance and other de-risking activities
- Managing retirement accounts
- Managing other liquid assets for the owner and family members
- And, of course, the big payday comes when the business is sold
I observe that many advisors are already doing a lot of this work somewhat randomly, so the opportunity to dramatically expand this line of business lies in developing process, partnership and promotion. Let’s explore these three topics separately.
Process. A critical first step in developing your exit planning practice is to define it:
- Create a detailed description of your service offering – what specifically are you going to provide for business owners?
- Develop your deliverables – what materials make your service offering tangible? (The Exit Planning Institute provides many resources in their library that can make the ramp-up much easier.)
- Establish comprehensive workflows for prospecting, discovery and ongoing client engagement through which your services are sourced, organized and delivered.
- Determine role assignment among your team members and external subject matter professionals.
- Evaluate the tools commonly used in this arena, e.g., BizEquity, The ExitMap and MAUS.
Partnership. Business owner transition consulting is a classic quarterback opportunity. You don’t have to be an expert in all facets of the service delivery. Instead, you lead the team of professionals who provide the service collectively. The advisor role often includes managing the client relationship, guiding the service team and adding your own financial planning, investment and insurance knowledge where appropriate. You’ll want to build a network of allied professionals – the subject matter specialists who, in partnership with you, deliver exit planning for business owners.
A smart tactic to consider is holding monthly or quarterly roundtable discussions for other professionals who are involved in exit planning for business owners. During these meetings, participants can share best practices, challenges and opportunities. Participants might include the following:
- Business consultants
- Business brokers
- ESOP specialists
- Family transition specialists
Advisors I work with who have developed this specialization report that, in most cases, it’s the business owner’s accountant who enjoys the position of most trusted advisor. Consequently, one of the paths to success with this market segment includes strategic partnership with accountants who have the right know-how and clientele. I’ve also observed in my coaching that family-owned businesses can be a breed apart and can come with their own psychological challenges. Partnering with a consultant or psychologist who specializes in family business succession can be enormously helpful.
Promotion. Once you’ve determined what you’re going to do, how and with whom, you’ll want to determine how best to get the word out to the right people. Below are a couple of quick thoughts on selling this new service:
Of course, you would update your website to include a landing page specific to this service, a case study unique to this segment and perhaps checklists, white papers and other resources that can inspire business owners to take action. I’m a huge proponent of the impact of visual communication, so I’d strongly suggest:
- A one-sheet resource for prospects (this would be a graphic roadmap or “Have you thought about all of these things?” piece).
- A one-sheet resource for prospective strategic partners or other professionals in the network (something that compellingly describes what this service is, how it benefits their clients and how it benefits them).
And of course, you would solicit existing clients who are business owners, as well as COIs and local business groups such as the Chamber of Commerce.
If you want to explore this idea and determine if makes sense for you, I strongly encourage you to read the book Walking to Destiny (or Walking to Density for you Back to the Future fans). I know it sounds like a self-help book, but it’s not. The subtitle says it all: 11 Actions an Owner MUST Take to Rapidly Grow Value and Unlock Wealth.
The author, Christopher M. Snider, has an impressive background. He was originally an auditor, then a consultant with PwC and an IT executive for a large company that was eventually sold to Textron. He went on to lead several IT firms in doubling their growth in two or three years. Now, in addition to leading Exit Planning Institute, he runs a company that buys, fixes, grows and sells other companies.
Think carefully about your level of interest in these topics. As I mentioned before, it’s not for everyone. Consider your comfort with and willingness to engage in broad, longer-term consultative engagements, project management and leading a team of external professionals in delivering the client experience.
Finally, consider becoming a Certified Exit Planning Advisor and joining a local chapter of the Exit Planning Institute.
This niche marketing alternative can be an exciting opportunity to leverage your talent and network in challenging new ways, provide a much-needed service to an underserved market, and help business owners and those they care about wrestle with what comes next.