April 4, 2019. By Jennifer Wolfsberg:

In the past five years, Centerpoint has become increasingly involved with helping clients through the processes involved with business sales and like transactions. In our relationships with these entrepreneurial spirited clients, we assist in vetting and building the team of professionals required to facilitate a smooth and optimized transaction. Such professionals include investment bankers, attorneys, CPAs and business brokers. Each situation is unique, and it is important to find the perfect fit for each company. While business owners are busy working within the business, we also help them build their financial plans to support their desired lifestyles, allowing them to feel confident about reaching their goals after the business is sold or transferred. We can’t emphasize enough the importance of having a strong team in place.

On April 2nd we had the pleasure of sponsoring an event in Boston for advisors and business owners in collaboration with the New England chapter of XPX titled “Pre and Post-Sale Wealth Planning Strategies”. This panel event featured respected professionals considered the best in their fields, including our own Director of Financial Planning, Olga Okaty CFP®. The event was insightful with a consistent theme: financial planning is a tool that can maximize personal and professional goals, and the sooner the process begins the better.

Olga was joined by fellow wealth management professionals Terrence Condron of UBS and Derek Mohomed of Mohamed-Merolla. The panel was moderated by Josh Daly, VP and Charitable Planning Consultant at Fidelity. The program began with an overview of Donor Advised Funds (DAFs) and their strategic use in the event of a business transaction. With DAFs growing at a rate of 5 to 1 over foundations, and over $5 billions contributed last year alone, this is not a vehicle to be ignored. Following the overview, the panel discussion began, and each panelist agreed that they have used the tool in their own philanthropic planning with clients. In addition to discussing philanthropic strategies, the panel covered the importance of engaging a planner, stress testing your financial plan, and vetting the transaction team. Among the many valuable pieces of information in the comprehensive discussion, a few quotes stuck out:

“A confused mind always says no”- Terrence Condron

Planning should begin long before a transaction is anticipated in order to gain the clarity needed to confidently make educated decisions. There are many moving parts once the real activity of the transaction begins; the worst case scenario is to layer confusion about one’s personal finances on top of an already demanding process. Without the full understanding that comes from a financial plan and business valuation, a business owner is likely to be paralyzed by the process and resist moving forward even when the best opportunities are presented.

“A transaction plan takes a little bit of soul searching”-Olga Okaty

Selling a business is not always just about maximizing the value of the business sold. Perhaps the legacy of the brand name, or the future of the employees, is more important than the net income of the sale. Thinking through how you will feel about the business once it is no longer yours is a difficult yet important exercise. Outside of the business aspect, you will need to think about how you wish to spend your spare time once the business is no longer consuming your every moment. Being reflective about these qualitative items can help to build a personal financial and professional business transaction plan that leaves you truly confident in your decision. As each panelist shared, when incorporating a financial plan into the transaction plan, one may find that the number needed to reach goals is actually lower than originally thought, meaning that owners may not have to sacrifice values for their bottom line.

“You really want specialists, not generalists”- Derek Mohomed

With the plethora of advisors available, you want to be sure that the professionals on your transaction team know your industry inside and out. Your financial planner/wealth advisor can often be the best person to construct this team as they are aware of not only your business intricacies, but also your personal communication preferences and family value system.  Choosing professionals that do this “on the side” is a recipe for disaster as the legal and tax environment surrounding these sales are ever changing.

There were many more valuable takeaways from the event, far too many to list, however we welcome you to view the highlights by clicking here. If you have any questions regarding your planning, or if perhaps you need assistance finding professionals for your transition team, we are happy to help. You can also visit the XPX New England website for further exit and transition planning resources.