Trusted Advisor: Financial Advisor
It is critical to work with an advisor who is an expert specifically trained to understand the complexities of selling or otherwise leaving a business. A Certified Exit Planning Advisor (CEPA) isn’t just concerned with your business goals; they consider your personal and financial objectives as well. A CEPA takes a holistic approach to help you develop a business strategy that integrates all aspects of your life and assist you to define your professional, financial and personal goals, and develop a holistic strategy to achieve them by the time you leave your company.
When you work with a CEPA, you’ll get an expert who will examine issues related to your professional industry with a holistic approach that integrates all aspects of the business exit planning decision when considering the sale of your business and planning for post-sale life is vital for several reasons:
- Expertise: When you work with a CEPA, you’ll get an expert who is specifically trained to understand the complexities of selling or otherwise exiting your business. They will examine issues related to your professional industry; your tolerance for risk; your timeline for retirement; and other critical areas of operating a business. They’ll help you decide when’s the best time to sell your business and how to minimize your taxes from the sale.
- Determine the Lifestyle Number: The "Lifestyle Number" refers to the amount of money a business owner needs after the sale to maintain their desired standard of living throughout retirement. This is a critical part of a business owner’s decision to transition to “what’s NEXT?”. Determining your Lifestyle Number is essential as it provides a clear financial target to aim for, ensuring that you can live comfortably without the risk of outliving your savings.
- Understanding the Value Enhancement process: A CEPA can assist the business owner to understand what issues may need to be addressed to enhance the value of the business prior to selling. These insights help ensure that the owner receives the best possible price. Acting as a quarterback, the CEPA can assemble valuation experts to ensure that the business is ready to sell at the desired price.
- Tax Efficiency: There are many tax implications to consider when selling a business. A financial advisor with the CEPA designation can advise on strategies to minimize tax liabilities, which can significantly impact the net proceeds from a sale. It is critical that you know the “net number” to determine what an exit from your business means to you. Will it be enough to live your ideal life and continue to check off the items on your bucket list?
- Risk Management: Financial advisors can help business owners and their family to understand how to create Volatility Control Portfolios to diversify investments post-sale. These strategies focus on transitioning from asset allocation to priorities and purpose. This also includes income planning with an emphasis on tax-efficiency and protecting against market volatility to ensure that the proceeds from the sale continue to support the owner's Lifestyle Number.
In conclusion, selling a business is one of the most significant financial events in an entrepreneur’s life. Engaging with a financial advisor who is also a Certified Exit Planning Advisor ensures that business owners are well-prepared for the transition, maximize their financial benefits, and are set up for success in their life post-sale.
