Skip to content

What Professionals Can Help Me With My Finances?

Posted on February 9th, 2021

When it comes to your finances, going at it alone can be daunting but if you want professional help, make sure you are consulting the right expert. How does a financial advisor differ from a wealth manager? Who is more qualified to give me the guidance I need?  What credentials should I pay attention to?  What fees should I expect to pay upfront? How does a financial advisor differ from a wealth manager? Wealth managers are just one kind of financial advisor who work with a specific clientele: those with a high net worth. However, you don’t necessarily need to be wealthy to work with a wealth manager, so you may want to consider their services even if you don’t have that much to invest. You can compare wealth managers here.

What is a Financial Advisor?

The term financial advisor is very broad. It could refer to different professionals. A certified public accountant(CPA) could be a financial advisor. They would give professional advice on a number of different practice areas, one being on income tax and advice on exiting a business. Some advisors also work with particular clients, such as professional athletes or business owners. You can get an idea of what specialties an advisor has by looking at his or her certifications and licenses.

What is a Wealth Manager?

Wealth managers are just a subset of financial advisors. The thing that sets them apart from other advisors is their clientele. Wealth managers primarily serve high-net-worth and ultra-high-net-worth individuals. And as the title implies, they usually manage large amounts of wealth for these clients.

Wealth managers are just a subset of financial advisors. The thing that sets them apart from other advisors is their clientele. Wealth managers primarily serve high-net-worth and ultra-high-net-worth individuals. And as the title implies, they usually manage large amounts of wealth for these clients.

Some larger firms provide a broad range services that overlap. Some will include financial planning as part of taking a fee to manager your money, others will charge a fix fee or offer a value proposal inclusive or filing your tax returns, offering financial advise and managing your money.

Financial advisors provide financial planning and investment management services for their clients. A wealth manager is one kind of financial advisor who typically works with high-net-worth individuals. The services of a wealth manager are very hands-on and comprehensive, so that a client can work with just one advisor for all of his or her financial needs.


Start Your Succession Planning Process By Knowing The Gaps

Posted on February 2nd, 2021

Start your succession planning process by knowing the gaps. The three gaps are referred to as Profit, Value and Wealth. These three numbers every business owner should know to meet their goals. The succession planning process is not about the now….selling your business for a profit is important but will it maintain your lifestyle for the next 2..5..20 years?  Will you receive market value for your business?  Will the wealth created in your business survive you and maintain the legacy you created in your children’s future?  These are all important aspects of succession planning.

The Profit Gap

The profit gap you are sacrificing by not operating at a best in class level also known as best in class profit less your profit level. Now you may think your company is operating at best in class however unless you have a valuation completed or the very least benchmark your company’s financials against peers in your industry. Most businesses trade at a multiple of EBITDA or earnings before interest, taxes, depreciation and amortization. Profit or EBITDA is a key metric used by most to come up with a value. It is your profit. EBITDA tends to be adjusted or normalized for extraordinary one time events, discretionary expenses tied to the business owner and expenses that are currently above or below market rate such as rents.

The Value Gap

The value gap the gap you are sacrificing by not operating at best in class. This is also referred to as best in class sales less your actual business value. We discussed EBITDA above, value gap is focused on the multiple times your profit when selling your business. Best in class will typically command the highest multiples at sale.


The Wealth Gap

The additional wealth you need to accumulate to meet your goals. This is your net worth goal less your current worth worth not including your business. Two simple questions to determine your net worth goal…what do you want to live on for your remaining life and what do you want. We do not include the value of the business because we want to think of assets that are easily convertible to cash.


How will you bridge the gap?

Selling Your Business For Maximum Price

Posted on January 26th, 2021

Have you thought about selling your business. Many owners like yourself have thought long and hard about this decision. It probably keeps them up most nights. They ask themselves over and over again, should I sell or keep the business for my children? After all, selling a business is a life impacting decision. It takes a systematic approach, a process that begins before you actually market your business for sale. Sure we were advised to keep the end in mind but what does that really mean?

Primary Reasons to Sell Your Business


Liquidity or Diversification of Wealth

Succession Planning

Health Concerns

Estate and Tax Planning

Strategic Move


When Is The Best Time To Sell

Business Is Performing Well

Solid Macroeconomic Conditions

Company Performance

M&A Activity is high

Abundance of Capital Flow

How Much Is My Business Worth?

For public company, the trading market dictates value. What about the private markets. We look to competitors and perform a valuation base on market comps. We analyze cash flow and normalize earnings. Hire a team of experience advisors. Start with an exit planning advisors, obtain a valuation from a certified value analyst, bring in a merger and acquisition banker who specializes in your market. They will help guide through the process of getting your company for sale. The process is a long one and the business owner must stay discipline to see it through, with the help of experts, will reach their business and personal goals and secure generational wealth for their family.



Preparing your business for an exit

Posted on December 14th, 2020

Preparing your business for an exit, succession or transition…at the end of the day does it really matter? Change is coming and time waits for no one.  Make a plan that is filed is both fluid and flexible with standard processes in play.  Some tasks will evolve over time and change will happen but having a plan that will still achieve your goals and and objectives is crucial. This plan will be the guide to helping your client achieve their goals and objectives. The process of transitioning the business purposely does not preclude the owner from improving the business and positioning it better for a sale or other options.

Your clients may have been through some of these pieces, in part, as you have worked with them through other projects in addition to your own thoughts and perspective. At some point in time if you work on transition planning projects, you will formally go through these steps, targeting the specific tasks needed to meet the owners’ goals and objectives. Some of the tasks may change a bit based on the discussion as well as discussions with transition team members and various groups of investors or companies. In addition, some of these steps and processes will run simultaneously.

There are several choices involving possible beneficiaries, buyers, outside financing, seller financing, and of course terms of the sale or transfer. Also give consideration to wealth management, insurance consideration and tax issues. The goal is to make sure you understand all the options and assist in developing an approach and strategy that makes sense for your client, given their personal goals.

Additional FAQ’s from the Exit Planning Institute.  Hiring a certified exit planner will help you navigate your planning. The following is an outline I have used to help guide the process:

  1. Establish Goals and Objectives
    • Align personal and business goals, including timing.
    • Assess readiness, given goals and timing.
    • Understand alternative transition options (e.g., family, employee, third party).
    • Understand transition process given different options (gift/sale, financing).
    • Include family and other “trusted” stakeholders in process.
    • Establish key advisory team (attorney, CPA, financial advisor, valuation professional, others to fill in gaps in experience/skills).
  2. Valuation/Appraisal
    • Business, across alternative transition options.
    • Real estate, including market rent if needed.
  3. Develop Strategy
    • Integrate goals/objectives with valuation/appraisal results.
    • Prioritize exit options.
    • Establish milestones and specific process/actions for exit options chosen.
    • Develop contingency plan.
    • Develop post transition strategy.
  4. Strategy Implementation
    • Ensure transition team fully understands goals and their responsibilities.
    • Schedule regular status updates.
    • Review, adjust, repeat.
  5. Contingency Plan
    • Developed as part of strategy.
    • Review and adjust as progress is made through primary strategy until goals are reached.
  6. Post Transition Strategy Implementation
    • Adjust transition team to be in synch with post transition strategy.
    • Maintain relationships with key transition team members throughout post transition period.
    • Enjoy next phase of life.

Below are some of the challenges you may encounter with your client. Not everything is perfect but being flexible is important!

  1. Do as I say not as I do: There is a lot going on with the whole process and it is easy to have the owner get caught in the weeds. Remembering the ultimate goals is important. Each step should be able to be tied back to and support the end game. Just saying they will do it does not ensure it gets done whatever the task is. Gentle reminders to demonstrate and model the behavior and action needed to all is important, especially the next leaders.
  2. Know what you do not know: Many business owners have become successful because they could and did it all. Knowing when to marshal what resources is another critical skill for the owner to have. Help them figure out what they do not know and support the path to finding out what is needed. Too often we all have seen business owners who take everything on themselves. This increases inefficiency and, in many cases, limits the business’s growth.
  3. Knowledge is power: Now they just must share it. Our job is to help harness the power of the owner and help make sure the transition happens intellectually. It is one thing having the papers signed; quite another for the intellectual and mental shift to take place and allow the next leadership team really to take the helm.
  4. Lack of commitment: While the plan is meant to be flexible to accommodate changes in personal and business circumstances, there still needs to be a firm timeline and certain trigger and decision points. If this is not clear, the plan meanders and never really gets executed, other leaders get frustrated (perhaps some leave). Once the plan is in motion, keep it moving barring any true dramatic game changing events.
  5. Communication, communication, communication: While there are certain things that must purposely be held close to the vest, so to speak, much of the plan should not be secret to the main players—the ones it will impact the most should know. And if done properly, there will be good ideas and thinking that emanate from engaging more rather than less.



The Basics of Small Business Valuation

Posted on December 10th, 2020

Before we dive into methods of business valuation, we should start with a basic discussion about what value means and why we can, or even want to, rely on business valuation methods. Once we are comfortable with what value is and why we should wonder about it, we will go over the mechanics of classic valuation approaches. We’ll focus on the ones that are typically used by a variety of market participants, including corporations, banks, portfolio managers and venture capitalists, buyers or sellers alike.

What is Value?

Value can mean different things to different people, depending on the circumstances, interpretations and role played in a transaction. For example, value means different things when we buy an asset versus when we sell it. We simply feel whatever we own has a higher value than normally perceived.  People tends to assign a higher value to something earned as opposed to something gained. As a result, we assign less value to winning the lottery as opposed to building a successful business over our lifetime. Makes sense?

Lets introduce some of the common terms in valuation

Fair market value: the price at which a business would change hands between a willing buyer and a willing seller  when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts;

Investment value: the value of a business in the hands of a particular buyer based on its own specific attributes.

Taking some liberties with the interpretation, we can think of Fair Market Value as the going concern of a business that either continues to be operated by its current management or is sold to a new owner who will continue to manage the business efficiently, without any substantial changes. In other words, the buyer is an average market participant, therefore value is not dependent on who operates the company, but on the uniqueness of the assets. Conversely, Investment Value assumes the combination of the subject company with one or more businesses and this creates synergies that are peculiar to every single potential acquirer. The motivation and/or special characteristics of the buyer will translate into different types of value (value follows the buyer)

Valuation Techniques

Income Approach: The most common used method, takes into account the present value of expected cash flow

Market Approach: Assumes the relative value of an asset can be measured by looking at how the market prices similar or comparable assets

Cost Approach: Value is based on the replacement cost of each of the individual assets.

Business valuation does not provide indisputable results because it combines both art and scientific components. Despite its limitations, it is very useful in establishing a base case, whose idea can be well captured by the notion of Fair Market Value. Under these conditions, valuation will illustrate what the value of the business is if bought by an average market participant. Presumably, this is the price that its current owner should be willing to pay if he or she did not own it already.

What business valuation is not very good at is helping the seller identify the highest possible Investment Value in the marketplace. This is because it is almost impossible to know all of the assumptions, potential synergies and motivations of each and every single potential acquirer in the marketplace. Nonetheless, let’s not forget that before deciding what to pay for a specific company, buyers typically go through a comprehensive valuation exercise where the assumptions reflect their own view of the world. Needless to say, that to their advantage, buyers have to care only about their own set of assumptions. If the buyer does use the methodologies illustrated above, it can be a good idea to do the same thing on the sell side, simply to challenge the assumptions or price ranges proposed by the acquirer. Think of business valuation as a safety guard. It doesn’t tell us the exact price of a company, but it can give us a pretty good idea of what a company is certainly not worth.


Hiring an exit planning consultant can be daunting….things to look for

Posted on December 9th, 2020

You have done your research and now decided to hire an exit planning consultant….what does the process look like?

You’ve come to realize that your business isn’t working exactly as you’d like it to. Whether it’s a lack of growth, challenges in employee turnover, or profits coming in less than you’d like; putting your finger on what you’re unhappy with is the very first step.

But let me be honest. You’re about to embark on something that’s going to either transform your business or cause a lot of frustration. Consultants can be bigger than life no different than rock stars. Survey business owners about their experiences with consultants and you’re more likely to get report cards with failing grades than passing ones. Understanding what makes for a successful partnership with a consultant is crucial to bringing about real change.

So how exactly do you pick the right one?

3 things you should look for when hiring a consultant.

1. Look For A Consultant Who Has Delivered The Outcomes You Are Seeking 

Begin with the end in mind

What Outcome is it that you want?

Is it business growth? A Higher Exit Price or Sales Price for your Business? Getting Sales out of a slump?  Whatever the results are that you are seeking, hire a consultant who specializes in delivering those. It sounds simple! But many leaders get this wrong in 2 ways:

First, they focus on hiring tactical players. A common example of this is the boom of Linkedin Prospecting gurus. You know… the guys who promise to fill up your calendar with qualified prospect appointments? I get a ton of these everyday….lots of value proposition but no value add. However, if you were to hire a consultant who was a former CRO or VP of Marketing and Sales you’d likely get the strategic advice that some of your foundational building blocks need upgrades. If you address them you’ll book far more appointments than hiring a LinkedIn Guru ever could.

The Second mistake commonly made by leaders is hiring the “we can do that” consultant who takes on any work possible rather than working with a defined type of business to deliver a specific type of outcome.  These are your so called Yes men. They confirm your ideas, tell you how great you are doing and collect their ongoing fee. Although it’s attractive to work with people you know, it better to work with a consultant who specializes in the outcome you need.

2. Look For A Consultant with Relevant Credentials

We get excited over people with impressive credentials. Many executives who’ve worked at large household names leave the corporate world and hang up a consulting shingle and I’m sure you’ve come across some. Its tempting to work with former executive of GE Capital or a former VP of technology but can they produce?

But here’s the real question: “Is that person’s experience and expertise relevant to delivering the outcome you want for your business?” We all want to work with people we like, but at the end of the day why are you hiring a consultant anyways? Shouldn’t they have credentials and experience relevant to accomplishing the outcome you’re seeking? I’ve have often noticed that a person who is relevant in a large corporate context is often ineffective in consulting with small businesses.

There are different skill sets that people developed based on the size and constraints of the companies they’ve worked for and with. Ideally you want to hire a consultant who has past experience of success in the size of your company, the lifecycle of your business, your business model and your client type and the outcome you are seeking.

The Consultant who has successfully worked with other businesses with similar characteristics to yours is likely your better choice since they have relevant credentials rather than impressive ones.

3. Look For A Consultant Who Understands The Methodology Of Change

Ultimately what you really want is a different outcome (more revenue, profits, or a greater exit price) and different outcomes require changes in beliefs, actions, and behaviors.

If you want to bring about change different behavior is needed. But how do you change the behavior of your employees and how does the classic consulting model fail to achieve this?

I believe that organization-wide change (changing our actions and beliefs) requires support at the top of the house with the CEO which is why my consultancy focuses on working with CEOs and leadership teams to create a Growth Roadmap that brings about real change.

First, I help you see the beliefs and actions that are causing turmoil and missed goals in your business through a Growth Analysis, the first of two parts in a Growth Roadmap. I do a comprehensive review of 6 key areas of the business including things like Employee Engagement, Sales Effectiveness, and Financial performance relative to peers-these can yield rapid insights into what needs your primary attention. All of our actions are linked to beliefs that we have and focusing on seeing our actions as well as the underlying beliefs are both critically important if we want to change ourselves and those that we work with. A Growth Analysis focuses on on both what you are doing and seeks to help you understand why you are doing it.

Second, I work with the CEO and leadership team to implement a growth operating system. This is the second of two parts in a Growth Roadmap. I teach teams a comprehensive yet simple way of running their business known as EOS or the Entrepreneurial Operating System. This is a way of thinking and doing business that helps you to focus on the important components and brings about rapid movement through clarity, accountability, and alignment in the organization. At the end of the day you and your leadership team need to own the change you want to see in your business. You’ll be around long after your consultant ends their engagement and you need to use a methodology of how to bring about change on your own.

Baked into the above steps is a focus on helping leaders empathize with and engage the hearts and minds of their people which is how real change takes place. Change initiatives that don’t involve your people and “roll things out” to them without their involvement and participation are destined to fail. Your leadership team is uniquely positioned to do this change work since you know your people better than an outside consultant. You just need a gameplan of how to do this and someone to coach you along the way.

Classically, Consultants don’t take the strategic and comprehensive approach that I’ve laid out above. This is why a year after they’ve come and gone the company is looking for a new approach to fixing the same issue that they hired the last consultant to do.

Your experience of hiring a consultant doesn’t have to be a failure. You can and will experience exponential success as you follow the 3 steps above.

The TCJA Nearly Doubled the Standard Deduction

Posted on January 7th, 2019

As mentioned previously, the standard deduction was nearly doubled from the TCJA, growing from $6,500 to $12,000 for individual filers, and from $13,000 to $24,000 for joint filers.

By making the standard deduction larger, the value of itemized deductions is lessened.  It is now more advantageous for many filers to take the standard deduction than to itemize their deductions.

To illustrate why this is a simplification, consider a married couple who under previous law would have taken $14,000 in various itemized deductions. Now, under the Tax Cuts and Jobs Act, it would be more advantageous for this couple to take the standard deduction of $24,000, as it allows them to deduct an extra $10,000 and eliminates the need to spend time and energy collecting receipts and completing Schedule A of the Form 1040.

In all, the Joint Committee on Taxation (JCT) estimates that the number of itemized filers will decline from 46.5 million in 2017 to just over 18 million in 2018, implying that nearly 30 million households will now find it more advantageous to take the standard deduction. In total, now 88 percent of filers will use the standard deduction to complete their taxes.

The Tax Cuts and Jobs Act Simplified the Individual Income Tax

Posted on January 7th, 2019

The TCJA simplified the tax code by making it more advantageous for many filers to take the standard deduction, instead of itemized deductions. The TCJA expanded the standard deduction from $6,500 to $12,000 for single filers and $13,000 to $24,000 for joint filers in 2018. This near doubling of the standard deduction limited the value of itemized deductions, making it more attractive to use the standard deduction.

Additionally, under the TCJA, the three provisions that reduce household income taxes based on household size were consolidated into two: the personal exemption was eliminated, replaced by the aforementioned expanded standard deduction and an expanded child tax credit.

These changes, along with new limitations on certain itemized deductions, simplified the tax code for many Americans.

How To Avoid Disappointment When It’s Time To Sell Your Business

Posted on December 31st, 2018

How do you avoid not being disappointed with the money you make from the sale of your company?
Perhaps you’ve heard that companies like yours trade using an industry rule of thumb or that companies of your size sell within a specific range, and you want to get at least what your peers have received.
While these metrics can be useful for tax planning or working out a messy divorce, they may not be the best ways to value your company.

The Only Valuation Technique That Really Matters

In reality, the only valuation technique that will ensure you are happy with your exit is for you to place your own value on your business. What’s it worth to you to keep it? What is all your sweat equity worth? Only when you’re clear on that will you ensure your satisfaction with the sale of your business.
Take Hank Goddard as an example. He started a software company called Mainspring Healthcare Solutions back in 2007. They provided a way for hospitals to keep track of their equipment and evolved into a slick application that hospital workers used to order supplies.
Goddard and his partner started the business by asking some friends and family to invest. The business grew, but there were challenges along the way: Goddard had to fire his entire management team in the early days, product issues needed to be solved and operational issues needed to be resolved.
At times, it was a grind, so when it came time to sell in 2016, Goddard reasoned that he had invested more than half of his career in Mainspring and he wanted to get paid for his life’s work. He also wanted to ensure his original investors got a decent return on their money.
He was approached by Accruent, a company in the same industry, who made Goddard and his partners an offer of one times revenue. Accruent had recently acquired one of Goddard’s competitors for a similar value, so presumably thought this was a fair offer.
Goddard brushed it off as completely unworkable. Goddard had decided he wanted five times revenue for his business. Even for a growing software company, five times revenue was a stretch, but Goddard stuck to his guns. That’s what it was worth to him to sell.
A year after they first approached Goddard, Accruent came back with an offer of two times revenue and, again, Goddard demurred.
Mainspring had developed a new application that was quickly gaining traction and he knew how hard it was to sell to the hospitals he already counted as customers.
He told Accruent his number was five times revenue in cash.

Eventually Goddard got his number.

Being clear on what your number is before going into a negotiation to sell your business can be helpful when emotions start to take over. Rather than rely on industry benchmarks, the best way to ensure you’re not disappointed with the sale of your business is to decide up front what it’s worth to you.

Which Is Better, a Financial Buyer or a Strategic Buyer?

Posted on December 21st, 2018

If you decide to sell your business to an outside acquirer, you’re going to have to decide between a financial and a strategic buyer—understanding the different motivations of these two buyers can be the key to getting a good price for your business.


A financial buyer is acquiring your future profit stream, so they will evaluate your business based on how much profit it is likely to make and how reliable that profit stream is likely to be. The more profit you can convince them your company will produce, the more they will pay for your business.


But there is a limit to how much they will pay, because financial buyers are playing the buy-low, sell-high game. They do not have a strategic rationale for buying your business. They don’t have an army of sales reps to sell your product or a network of retailers where your product could be merchandised. They are simply trying to get a return on their investors’ money, so they tend to buy small and mid-sized businesses using a combination of this investment layered on top of a pile of debt, and they want to buy your business as cheaply as possible with the hope of flipping it five or ten years down the road.


Because financial buyers are usually investors and not operators, they want you and your team to stick around, so they rarely buy all of a business. Instead, they buy a chunk and ask you to hold on to a tranche of equity to keep you committed.


A strategic buyer is a different cat—usually a larger company in your industry, they are evaluating your business based on what it is worth in their hands. They will try and estimate how much of their product or service they can sell if they added you into the mix. Because of their size, this can often lead to buyers who are willing and able to pay much more for your business.


Tom Franceski and his two partners had built DocStar up to 45 employees when they decided to shop the business to some Private Equity (PE) investors. The PE guys offered four to six times Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), which Franceski deemed low for a fast-growing software company.


Franceski was then approached by a strategic acquirer called Epicor, which is a global software business with a lot of customers who could use what DocStar had built. Epicor offered DocStar around two times revenue—a much fatter multiple than the PE firms were offering.

Contact Us

Ask a Question

Find comfort in knowing an expert in accounting is only an email or phone-call away. (312) 523-2114

We Are Here to Help

We will happily offer you a free consultation to determine how we can best serve you. Contact Us

Send Us a File

Use our convenient SecureSend page to securely deliver a file directly to a member of our firm. Secure Send

Subscribe to our Newsletter

Subscribe to our monthly emailed newsletter to receive news, updates, and valuable tips. Subscribe