CLIENT RELATIONS
oped a program called SuccessionFlex that aids firm owners in selling part of their businesses , 30 % to 40 %, to Ameri- Flex over a period of time . That allows the sellers to take some money off the table without having to make a clean break , which might be difficult . No equity changes hands at the time of the agreement , and the only requirement is that the advisor remains affiliated with AmeriFlex . Thomas Goodson , the firm ’ s president , developed the program with Larry Roth , managing partner of RLR Strategic Partners , a boutique M & A and strategic advisory firm . ( Roth is also the former CEO of both Cetera and the Advisor Group .)
“ What happens is that without advance planning an advisor is subject to the whims of the world where there might be no one to take over when they are ready to exit ,” Goodson says .
Some business owners create their firms with the idea of selling in the first place , hoping to make a large profit before moving on to another venture . It ’ s a typical mindset in the high-tech space .
Adam Katz , a partner and private wealth advisor at the New York Citybased CI Kore Private Wealth , is used to dealing with these types of entrepreneurs , who have different problems than owners who just want to live on their company ’ s revenue after retiring .
“ Our typical client is 34 years old and plans to create a business and get out in five to seven years ,” Katz says . “ This is not your traditional family-owned busi-
Solo practitioners might want to leave a family-owned business to their children , but the kids likely have different levels of interest in taking over . ness with an attachment to a brand , and it is not someone who wants to take a company public . It is someone who wants to go out and start another company , which he can then sell in five to seven years .”
On the other hand , this type of entrepreneur then has to think of a second or third act , Katz says .
Joshua T . Lieberman , a partner at Lenox Advisors , a national wealth advisory firm , says that sales become more complex when there are multiple owners . He was recently working with a company that had four owners , two of whom were ready to retire , while the other two wanted to remain in business .
Insurance products may be the answer in such cases . An insurance policy allowed the two retiring partners at Lieberman ’ s client firm to exit the business with buyout money while the other two partners remained whole .
Solo practitioners , meanwhile , might want to leave a family-owned business to their children , but the kids likely have different levels of interest in taking over .
Again , preplanning is a key to success . “ It ’ s easy to find stories about families whose members are now estranged because of the dissolution of a business ,” Lieberman says . “ Our job as financial advisors is to get the family members to have these difficult conversations before it is too late . The same considerations apply to financial advisory firms as other types of businesses .”
A family can use legal agreements to keep a business going through the second generation , under either family members or employees ; that ’ s why it ’ s important for an exiting owner to assemble the right team of experts that includes , but is not limited to , a financial coach , says Andrew James Lom , global head of private wealth at Norton Rose Fulbright , a law firm in New York City .
Various agreements can be crafted to ensure that key employees remain with a firm when it is passed to a new owner , and also make sure that a percentage of key customers remain with the company .
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34 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2023 WWW . FA-MAG . COM