If you are thinking about adding Exit Planning to your practice, there are several factors you can use to assess whether it makes sense for you to acquire the knowledge and training required to be an effective Exit Planning Advisor. In this article, we look at the primary factors: 

1.  Your goals 
2. A willingness to spend time gaining knowledge 
3. Your ability to recruit and work with a team of other professional advisors 

Factor 1: What do you want Exit Planning to do for you and your practice? 

Advisors cite these reasons for deciding to become Exit Planning Advisors: 

• 22% - Improve or adopt a consistent planning process 
• 22% - Expand services to existing business clients 
• 22% - Make a difference in lives of my clients 
• 17% - Support closely held and family businesses 

We find advisors who undertake Exit Planning solely to increase their revenues seldom stay the course. They are less interested in helping owners plan for the future than they are selling a product or service today. Exit Planning does result in substantially greater and more sustainable revenue, but it takes an investment of time to learn the tools and process of Exit Planning.

Factor 2: A willingness to spend time gaining knowledge 

Like most advisors, we understand you want to help owners but are limited by a lack of knowledge of the process and tools to do so. Few advisors are willing to step forward with advice unless they are confident they will do no harm. To help owners, advisors need additional knowledge of a process, know how to execute a plan, and have access to the right tools. 

Process: This blog focuses on BEI’s Exit Planning Process, a process that BEI and our Members have developed and refined for the past 20+ years. If you’ve been following this blog, you probably know more about Exit Planning than most of your peers.  

Execution / Tools:  

You can learn a lot about Exit Planning from this blog, but you need to know more about how to execute an Exit Plan, e.g., what to ask and what specific actions to recommend to address the obstacles that stand in the way of an owner’s successful exit. 

For example, if an owner’s goal is to grow business value, is the best tool bonusing ownership, selling ownership, or using money to motivate a child or key employee? When is the right time to minimize business risk through employment agreements with important employees? Using the right tools at the right time is critically important to the owners we work with. You may be thinking, “I don’t have the time needed to gain the knowledge necessary to help owners with issues such as these. I’ve got a practice to run! I’m not going to charge ahead with Exit Planning when I’m not confident of what I’m doing.”  

We understand your concerns. BEI Members know what questions to ask owners and they use EPIC™ Exit Planning Software to generate a variety of appropriate recommendations. It takes about 10 hours to take our initial training course and about an additional 15 to complete our advanced course. After completion of both of these training courses, you would be eligible for the Certified Exit Planner designation. Let’s look at how we use knowledge of the planning process and relevant tools in planning. 

One Tool in Action 

It’s helpful to look at how process and execution interact in a typical Exit Planning situation. Let’s say you discover that an owner wants to motivate a key employee to increase revenue in her business and asks you for help. By asking relevant questions, you learn that this owner is unwilling to sell but is interested in designing an incentive plan that rewards the key employee for overall revenue growth of the company. Using this input, you use BEI’s EPIC Planning software to offer several possible recommendations, including: 

• Cash bonus 
• Cash bonus with partial deferral for a year or so 
• Non-Qualified Deferred Compensation Plan 
• Phantom Stock Plan 
• Stock Appreciation Rights Plan 

Each recommendation contains a short description of situations when it might be appropriate, what it is, and what it does. For example, these recommendations would include a discussion of incentive formulas, vesting schedules, and forfeiture provisions. Based on the owner’s response to a recommendation, the Exit Planning Advisor often suggests a meeting with a professional experienced in designing and implementing the specific recommendation. This leads us to the next factor: access to expert advisors.  

Factor 3: Your ability to form and use a team of expert advisors 

BEI Members know that no one advisor can do it all, so they rely on their advisor teams to provide suggestions, observations, and additional (or revised) recommendations. Having a team of experts behind them gives them confidence that what they recommend is the best solution to a client’s needs. That team also gives Exit Planning Advisors confidence to pursue planning engagements and suggest appropriate courses of action. BEI provides its Members with a process and tools to find, vet, and recruit expert advisors. If done right, advisors on an advisor team are happy to work with BEI Members because they are referring them clients! 

Takeaways 

• Advisors become Exit Planning Advisors for personal and financial reasons. 
• The foundation of a successful Exit Planning advisory practice is:
  • Knowledge of a proven planning process 
  • Access to a host of recommended actions to include in an owner’s Exit Plan with information on the appropriate use/situation for each. 
  • The creation and use of an expert advisor team to confirm and implement the Exit Planning Advisor’s recommended course of action and to suggest additional recommendations when appropriate.  

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