What business owners want from advisors

December 28, 2017

By Martha Sullivan, CPA, CVA/ABV, CM&AA, CEPA
Partner, Succession Planning Practice Leader

Martha leads HK’s succession and exit planning services division and is a regular contributor to Wisconsin’s InBusiness digital magazine.

Year-end is the time of year when people come together and want to get transactions done. Recently, as a CPA and value-growth advisor, I’ve been working with two different individuals looking to buy a business. In one instance, the buyer, “George,” has a target and wants guidance on many aspects of the deal. In the other instance, “Gina” is looking for potential new targets after a recent opportunity fell through. They’re assembling their team of advisors up front before they invest one dollar in a new company. George and Gina want different consulting support. However, they also want the same important trait in their next adviser — someone who is a connector and collaborator.

George has a cool opportunity to buy a struggling business that has the very type of capacity he needs to jump-start a compatible startup he’s involved with. This platform would then be the foundation for future bolt-ons. George wants support from accounting, business growth, legal, capital, and financing advisers now. Within 18 to 24 months, he’ll expand the circle to include investment banking.

Gina, on the other hand, is in a different position. She’s bought and sold companies as a member of corporate and private equity teams. She’s solid operationally. With an outstanding relationship with her bank, conventional financing is already lined up. Gina’s connections are vast, so she can pull together other investors if additional capital is needed. Gina also has solid relationships with her attorney and wealth manager, and she knows they work well together. What she needs is access to sellers and support with the transaction. To that end, she wants her new accounting and advisory firm to embrace a collaborative approach to get the deal done and provide ongoing services.

In short, George and Gina want their advisers to:

  • Embrace an approach that is collaborative. Egos are in check and there is willingness to work well in a group.
  • Collectively understand their goals and challenges to build the better mousetrap to meet those needs together.
  • To serve them for the long term, well after a transaction is complete, and:
    • Advise them on the business integration/launch, ongoing operations, and new projects for the foreseeable future;
    • Watch for and introduce them to new opportunities that might fit their long-term vision;
    • Be a sounding board for new business ideas related to their long-term plan;
    • Connect them with other resources as needs arise; and
    • Provide external accountability to stay on track toward their goals.

These expectations are reasonable. They are also not new needs or expectations from a business owner. What’s different is the fact that these two prospects specifically asked about it and made it clear that collaboration was a critical element in their decision making. It would be demanded from all the advisers they brought on to their team.

Collaboration has been a concept and topic of discussion within some advisory circles for years. The conversations with George and Gina drive a key point home. It’s moved beyond concept — business owners are requiring it.

Using a sports analogy, advising business transitions is a team sport. As a business owner, you are in the luxury box, setting the goals and objectives for your advisory team. Your team, with your go-to quarterback, is running the plays needed to get you the win in the most cost effective and results oriented way.

Too many times, owners stick with the advisers they have worked with for years, regardless of whether the adviser is still up to the task of helping with the transition and transaction. Sometimes this is because of a lack of experience in this specialized area. Other times there is an inability or unwillingness to play nice in the sandbox together.

For example:

  • Have the wealth manager and business valuation/investment bankers been brought in priorto transaction negotiation so that the business owner and adviser team all have a clear understanding of the difference between what the owner needs, wants, and can expect from the transition?
  • Is the accountant holding back on helping with the transition because they are afraid of losing you as a client once the transition is done? I’ve heard other CPAs express this attitude. Personally, I don’t understand that logic — you’re going to move forward with or without them.
  • Is the attorney territorial and not sharing important information until the deal is penned? I’ve witnessed this preventing the business owner from getting advice on maximizing proceeds, tax, or other aspects that the lawyer hasn’t considered.

As we celebrate the holidays and upcoming New Year, I encourage you to commit to pulling your advisory team together, whether transitioning your business is decades away or coming up fast. George and Gina are benefiting from a collaborative model, and you can, too. Make it a New Year’s resolution.

This post was originally published at www.ibmadison.com on Dec. 28, 2017.

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