There’s a lucrative niche market for financial advisors that they might be overlooking: helping business owners sell their companies.
That’s the observation of Brian Singleton, a lawyer and financial planner with MassMutual, who spoke on the topic at a conference sponsored by the New Jersey chapter of the Financial Planning Association.
“The market is hot right now for mergers and acquisitions,” Singleton said. “M&A has been up 100 percent year after year recently, and 2019 will exceed that rate.
“As advisors,” he said, “you can work with business owners who want to sell in the next one to five years—that is where you can add value for a client.”
Many advisors aren’t sure how they can help, he said, but it’s in the pre-selling and post-selling phases where they can add the most value to small business owners.
In this arrangement, advisors will be quarterbacks and must help build a team of CPAs, attorneys and insurance experts for the seller. (You should build referral relationships with these professionals for this reason, he said.) Then your business owner client needs to dig deep into his or her finances and get the books up to standard bookkeeping practices. “This will help determine the value of the business,” Singleton said.
“Then make sure the business owner has key vendors, employees and customers under contract so the new owner will not lose them,” he added. “The advisor has to step into the shoes of the buyer.”
And yet advisors are not marketing themselves this way, he said.
The time before a business is sold is an opportunity for tax planning and estate and inheritance planning with many different kinds of tools available to the advisor and seller.
“When your client is meeting a potential buyer,” Singleton said, “make sure he or she knows the opening pitch, couches his offer and the details in conversational language and understands how to leverage his resources and make sure the seller is in position to walk away from an offer if needed.”