If, you have been thinking about adding Exit Planning to your practice.
If, you are interested in working with business owners on a more comprehensive level.
If, you are looking to differentiate your practice . . . then
Register for Today's FREE Call @ 3:00 EST
Our Secret Workshops are being revealed !!
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Upcoming Events
Thursday & Friday,
June 18th & 19th
(Norwood, MA)
Thursday & Friday,
June 25th & 26th
(Mohegan Sun Casino, CT)
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Pinnacle Equity Solutions is pleased to open our Summer Workshops and extend an invitation to these 2-Day Exit Planning presentations being held at the end of June, 2009. These 2-Day Workshops are a big hit with all who attend and are just the thing to jump-start your Exit Planning practice.
John Leonetti, founder of Pinnacle Equity Solutions will be hosting a call to describe the 2-Day workshop and what makes it such a success. To listen in to see how Exit Planning can grow your practice, and to get details about these upcoming Workshops, click the link below and register for the upcoming call.
We look forward to seeing you on the call.
Click Here to Register for the FREE Call!
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide advisors with the tools they need to incorporate Business Exit Planning into their advisory practices. To learn more about John's Exit Strategy Services and to receive a FREE copy of his special report, "How To Incorporate Exit Strategies Into Your Advisory Practice", visit Pinnacle Equity Solutions
Wednesday, June 3, 2009
Thursday, April 16, 2009
Selling Through Education
The role that I play here at Pinnacle is truly unique. Every day I get to speak with top advisors from around the country on the topic of exit planning. This is particularly exciting as we all recognize how new this industry is and what great opportunities there are to provide leadership in local markets and with business owner clients.
One of the most interesting topics that I find myself discussing is the concept of 'selling through education'. Aside from the general comments above about the changing marketplace that we all are in, the fact remains that 'exit planning' is a relatively new concept as the industry is still emerging. Accordingly, I see many advisors and institutions promoting 'exit planning' without a true awareness of what 'exit planning' really is. Moreover, I am left with the steady awareness that most business owners do not know, exactly, why an exit plan is critical to their lives.
It is each advisor's individual responsibility to educate this marketplace on this topic and to do so in a way that serves the business owner's best interests, while also building revenue and profitability for that advisor.
How then, in this changing marketplace, can this new service be explained and delivered?
We begin by recognizing that nowadays - no matter what product or service we are selling - our potential (or existing) clients and customers are very busy. This economy has the best of business people questioning their every decision and considering each purchase they make with the perceived and immediate importance of it in their lives today. From a practice management perspective, this makes our lives more challenging, but, at the same time, creates an amazing opportunity if you have the ability to educate your client as part of your marketing and sales process.
Almost every coaching student that I work with is redefining their message to the market. I strongly encourage each advisor to write a Special Report - or a short White Paper - that describes who they are, what they do, the market that they serve, and the reason why the work that they do is so important to their clients.
Why is this so key?
Because consumers are more discriminating than ever before and we need to reach out to them to tell them our story. In addition, because everyone appears to be so busy, it is important to put information in front of them that they can review, on their own schedule, to learn more about you, what you are offering, and why it is relevant/essential to their lives right now.
The greatest extension of this practice, for me, has been the Exiting Your Business book that I wrote last year. As more and more business owners and advisors read through the book, they are drawn to the message in this book. This, in turn, draws them to Pinnacle's business. And, the key point here is that when they do contact Pinnacle's office, they already know what we do, why we do it, and the immediate importance that it has in their lives. This really helps with the sales process, i.e. selling through education and attracting customers and clients (in our case, Members) who are 'prequalified' with their interest in our services.
POINT: People that you want to do business with will actually read what you have to say and will evaluate their buying decision without you 'selling' them - you are educating them on the relevant and immediate importance of what you do so that they can apply it to their lives today. These potential customers and clients can understand your view of the world before you meet them in person or over the phone. So, when you do meet with them you are not trying to explain your value proposition in a time-compressed manner. Rather, the meeting becomes a process of verification of what you do instead of a discussion about discovering what it is that you do. Again, people / business owners are short on time today - so, we adjust our process to meet the marketplace.
This process of increased communication therefore begs a logical question that every advisor needs to ask themselves in this market. Namely 'what VALUE am I bringing to the client / prospect that I am currently talking to?'
On a recent call with an advisor interested in Pinnacle's process I asked the following questions -
'when you talk business owners, what value do you feel you are brining to the conversation?' and
'what differentiates your practice in their eyes and why should they do business with you?'
Ironically, even though I asked a direct question, I got an odd answer - she simply said 'You're right'.
The 'you're right' answer was an admission that there was no value in the conversation with the business owner. In this world of increasing commoditization of services, this advisor admitted - to herself - that there was no value. Therefore, why would the business owner do business with her?
Seems crazy. But so is the world that we are living in.
Once you understand the value of what you offer - i.e. what you truly have to give to this client and the relationship, the work is far from over. You then need to educate your prospect / client on why this value is relevant to their current situation. Again, that process is 'selling through education'.
When you are more focused on what you have to give to this client than what you can get from the relationship, things really begin to take shape. And that is the primary conversation that I have with each of my coaching students as we navigate this fast-changing world. And, as this emerging exit planning industry takes shape faster and faster, it is beholden upon each exit planner to understand and communicate exactly what exit planning is and why it will change the business owner's life.
In summary, today's consumer needs to be educated on your services and you need to understand the value of what you are offering. When you combine your message with the intention to find clients who value your service and will listen to your message, then you begin to attract to your practice those clients who are not only willing to pay you for your service, but are also much more enjoyable to do business with.
We need to change with this changing world. Selling through education is the first best step towards securing new clients in this highly opportunistic environment.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
One of the most interesting topics that I find myself discussing is the concept of 'selling through education'. Aside from the general comments above about the changing marketplace that we all are in, the fact remains that 'exit planning' is a relatively new concept as the industry is still emerging. Accordingly, I see many advisors and institutions promoting 'exit planning' without a true awareness of what 'exit planning' really is. Moreover, I am left with the steady awareness that most business owners do not know, exactly, why an exit plan is critical to their lives.
It is each advisor's individual responsibility to educate this marketplace on this topic and to do so in a way that serves the business owner's best interests, while also building revenue and profitability for that advisor.
How then, in this changing marketplace, can this new service be explained and delivered?
We begin by recognizing that nowadays - no matter what product or service we are selling - our potential (or existing) clients and customers are very busy. This economy has the best of business people questioning their every decision and considering each purchase they make with the perceived and immediate importance of it in their lives today. From a practice management perspective, this makes our lives more challenging, but, at the same time, creates an amazing opportunity if you have the ability to educate your client as part of your marketing and sales process.
Almost every coaching student that I work with is redefining their message to the market. I strongly encourage each advisor to write a Special Report - or a short White Paper - that describes who they are, what they do, the market that they serve, and the reason why the work that they do is so important to their clients.
Why is this so key?
Because consumers are more discriminating than ever before and we need to reach out to them to tell them our story. In addition, because everyone appears to be so busy, it is important to put information in front of them that they can review, on their own schedule, to learn more about you, what you are offering, and why it is relevant/essential to their lives right now.
The greatest extension of this practice, for me, has been the Exiting Your Business book that I wrote last year. As more and more business owners and advisors read through the book, they are drawn to the message in this book. This, in turn, draws them to Pinnacle's business. And, the key point here is that when they do contact Pinnacle's office, they already know what we do, why we do it, and the immediate importance that it has in their lives. This really helps with the sales process, i.e. selling through education and attracting customers and clients (in our case, Members) who are 'prequalified' with their interest in our services.
POINT: People that you want to do business with will actually read what you have to say and will evaluate their buying decision without you 'selling' them - you are educating them on the relevant and immediate importance of what you do so that they can apply it to their lives today. These potential customers and clients can understand your view of the world before you meet them in person or over the phone. So, when you do meet with them you are not trying to explain your value proposition in a time-compressed manner. Rather, the meeting becomes a process of verification of what you do instead of a discussion about discovering what it is that you do. Again, people / business owners are short on time today - so, we adjust our process to meet the marketplace.
This process of increased communication therefore begs a logical question that every advisor needs to ask themselves in this market. Namely 'what VALUE am I bringing to the client / prospect that I am currently talking to?'
On a recent call with an advisor interested in Pinnacle's process I asked the following questions -
'when you talk business owners, what value do you feel you are brining to the conversation?' and
'what differentiates your practice in their eyes and why should they do business with you?'
Ironically, even though I asked a direct question, I got an odd answer - she simply said 'You're right'.
The 'you're right' answer was an admission that there was no value in the conversation with the business owner. In this world of increasing commoditization of services, this advisor admitted - to herself - that there was no value. Therefore, why would the business owner do business with her?
Seems crazy. But so is the world that we are living in.
Once you understand the value of what you offer - i.e. what you truly have to give to this client and the relationship, the work is far from over. You then need to educate your prospect / client on why this value is relevant to their current situation. Again, that process is 'selling through education'.
When you are more focused on what you have to give to this client than what you can get from the relationship, things really begin to take shape. And that is the primary conversation that I have with each of my coaching students as we navigate this fast-changing world. And, as this emerging exit planning industry takes shape faster and faster, it is beholden upon each exit planner to understand and communicate exactly what exit planning is and why it will change the business owner's life.
In summary, today's consumer needs to be educated on your services and you need to understand the value of what you are offering. When you combine your message with the intention to find clients who value your service and will listen to your message, then you begin to attract to your practice those clients who are not only willing to pay you for your service, but are also much more enjoyable to do business with.
We need to change with this changing world. Selling through education is the first best step towards securing new clients in this highly opportunistic environment.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
Wednesday, April 8, 2009
Coming to Their Own Conclusion
“You can’t impose a mind-set on people. It emerges from a learning process in which they become persuaded that an objective is worthwhile and then apply their talents at realizing it.”
- Brian Pitman, from an article entitled
“Leading for Value” found in the Harvard
Business Review April 2003 edition.
The above quote summarizes quite nicely a part of the answer to the most common question asked by our Pinnacle Members, "Have you 'cracked the code' for prospecting business owners and winning exit planning engagements?"
Coming off the successful 2-day Workshop in Las Vegas, I am reminded of this critical observation - one which we devoted a majority of Day 1 to addressing, "How should business owners be approached in order to win engagements?" The short answer is to allow the owners a question and answer process - to 'create a space' - that enables these owners to come to their own conclusion that they really need to begin planning the exit from their privately-held business.
You see, as professional advisors, we spend a lot of time wanting to answer our client's questions. We hold onto the idea that our clients should come to us for answers, not for us to ask them more questions. But the process of engaging a business owner for an exit plan does not include the advisor telling the business owner what the answer is. The process includes asking the right questions, in the right way, so that the owner can struggle enough with the answers to realize that they have no idea how they are going to exit their business and protect their wealth.
This process is important to understand in order to get consistent results with your exit planning engagements. This is a 'learning process' as the quote above indicates. The owner persuades themselves that an exit plan is a worthwhile objective for them to pursue. When we try to impose this mindset on the owners that we work with, we make a convincing, but not a compelling presentation. The owner hears the information and consciously is in agreement with what should be done.
However, at a deeper level, the owner has not accepted this information and the exit planning process as critical to their success. They are not motivated to take action because they are only being influenced on an intellectual level, not an emotional level.
By contrast, when an owner goes through a questioning process that includes them realizing that the majority of their wealth is tied to their businesses, that they have no successor or exit plan, that the transition out of the business will take longer (and be more difficult) than they ever thought it could be, only then does that owner become motivated to begin to apply their talents to designing and implementing their business exit.
Spend some time thinking about this process. Understand that engaging a business owner in this way is a highly personal and sensitive topic. Every conversation with an owner is critically important to their lives. Treat the process accordingly and listen to the answers that the owners give. Review our updated questionnaire (Modules #1-#3 on the Membership site) to determine if you are asking the questions the right way.
And realize that the process of asking questions in this way is the key to success in this area. If you are still trying to 'impose a mindset' upon these owners, you are fighting the tide and that is likely the reason for the engagements that fall short. Review your process, know that this service is in high demand, and begin a new approach to your owners that recognizes the sensitivity and importance of this unique message and capability that you carry.
In the meantime, remember to contact our office with any questions as we are anxious to assist you in your continued success.
© John M. Leonetti
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
- Brian Pitman, from an article entitled
“Leading for Value” found in the Harvard
Business Review April 2003 edition.
The above quote summarizes quite nicely a part of the answer to the most common question asked by our Pinnacle Members, "Have you 'cracked the code' for prospecting business owners and winning exit planning engagements?"
Coming off the successful 2-day Workshop in Las Vegas, I am reminded of this critical observation - one which we devoted a majority of Day 1 to addressing, "How should business owners be approached in order to win engagements?" The short answer is to allow the owners a question and answer process - to 'create a space' - that enables these owners to come to their own conclusion that they really need to begin planning the exit from their privately-held business.
You see, as professional advisors, we spend a lot of time wanting to answer our client's questions. We hold onto the idea that our clients should come to us for answers, not for us to ask them more questions. But the process of engaging a business owner for an exit plan does not include the advisor telling the business owner what the answer is. The process includes asking the right questions, in the right way, so that the owner can struggle enough with the answers to realize that they have no idea how they are going to exit their business and protect their wealth.
This process is important to understand in order to get consistent results with your exit planning engagements. This is a 'learning process' as the quote above indicates. The owner persuades themselves that an exit plan is a worthwhile objective for them to pursue. When we try to impose this mindset on the owners that we work with, we make a convincing, but not a compelling presentation. The owner hears the information and consciously is in agreement with what should be done.
However, at a deeper level, the owner has not accepted this information and the exit planning process as critical to their success. They are not motivated to take action because they are only being influenced on an intellectual level, not an emotional level.
By contrast, when an owner goes through a questioning process that includes them realizing that the majority of their wealth is tied to their businesses, that they have no successor or exit plan, that the transition out of the business will take longer (and be more difficult) than they ever thought it could be, only then does that owner become motivated to begin to apply their talents to designing and implementing their business exit.
Spend some time thinking about this process. Understand that engaging a business owner in this way is a highly personal and sensitive topic. Every conversation with an owner is critically important to their lives. Treat the process accordingly and listen to the answers that the owners give. Review our updated questionnaire (Modules #1-#3 on the Membership site) to determine if you are asking the questions the right way.
And realize that the process of asking questions in this way is the key to success in this area. If you are still trying to 'impose a mindset' upon these owners, you are fighting the tide and that is likely the reason for the engagements that fall short. Review your process, know that this service is in high demand, and begin a new approach to your owners that recognizes the sensitivity and importance of this unique message and capability that you carry.
In the meantime, remember to contact our office with any questions as we are anxious to assist you in your continued success.
© John M. Leonetti
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
Wednesday, March 25, 2009
What an Event!
It is hard to describe the educational experience that 22 high caliber, sophisticated, and entrepreneurial advisors went through last Thurday and Friday at Pinnacle's 2-day Workshop in sunny Las Vegas. Advisor after advisor told me that this was the best presentation and educational event of their careers and that they would be going back to their offices to redesign their advisory practices to capture this opportunity.
Listed below is some of the feedback that was given to Pinnacle's staff regarding the quality of the learning experience.
----------------------------------
"The subject matter was deep and insightful. The synergy among the high caliber attendees really took the Workshop to another level. This is a must for the client-focused advisor in the business owner marketplace."
- Emrich Stellar
----------------------------------
"Great Workshop and knowledge - very practical."
- Irving Katz
----------------------------------
"The beauty of John's methodology is that it is not lost in the numbers . . . . by recognizing the human desires, needs, and foibles of the exiting owner, John's techniques help develop a sound framework for a successful and satisfying ownership transition."
- Rob Brown
----------------------------------
"The synergistic dynamic overlay of talents dedicated to a well conceived process to help qualified business owners make well informed decisions on exit options"
- John A. House
----------------------------------
"John does a great job in turning a demographic observation into a concrete business. Excellent program !"
- John Alter
----------------------------------
"Excellent process and techniques for making the most of the exit planning opportunity."
- Russ Gorman
----------------------------------
"Overall excellent !"
- Greg Mickelson
----------------------------------
"Excellent program"
- Buz Code
With continuing feedback of this kind, we grow more and more excited about our next program in Boston this Fall. Look for an announcement of the dates and location this summer.
In the meantime, if you want to stay ahead of this growing marketplace, consider Pinnacle's Home Study Course to get you going with Exit Planning right away.
© John M. Leonetti
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
Listed below is some of the feedback that was given to Pinnacle's staff regarding the quality of the learning experience.
----------------------------------
"The subject matter was deep and insightful. The synergy among the high caliber attendees really took the Workshop to another level. This is a must for the client-focused advisor in the business owner marketplace."
- Emrich Stellar
----------------------------------
"Great Workshop and knowledge - very practical."
- Irving Katz
----------------------------------
"The beauty of John's methodology is that it is not lost in the numbers . . . . by recognizing the human desires, needs, and foibles of the exiting owner, John's techniques help develop a sound framework for a successful and satisfying ownership transition."
- Rob Brown
----------------------------------
"The synergistic dynamic overlay of talents dedicated to a well conceived process to help qualified business owners make well informed decisions on exit options"
- John A. House
----------------------------------
"John does a great job in turning a demographic observation into a concrete business. Excellent program !"
- John Alter
----------------------------------
"Excellent process and techniques for making the most of the exit planning opportunity."
- Russ Gorman
----------------------------------
"Overall excellent !"
- Greg Mickelson
----------------------------------
"Excellent program"
- Buz Code
With continuing feedback of this kind, we grow more and more excited about our next program in Boston this Fall. Look for an announcement of the dates and location this summer.
In the meantime, if you want to stay ahead of this growing marketplace, consider Pinnacle's Home Study Course to get you going with Exit Planning right away.
© John M. Leonetti
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
Monday, March 16, 2009
Picking Up, Dusting Off, Moving On
Business owners today are beginning to emerge from the bunkers that they have built around themselves and are looking ahead, once again, to what the future has in store.
There is a general feeling that we have suffered the worst of this storm. Moreover, since even Warren Buffett agreed that this economic maelstrom is 'the worst case scenario' that was envisioned, perhaps it is also true that any more suffering would merely be incidental to what has already been felt . . . could this be the tell-tale signs of a bottom?
I don't want to be the fool who says that this market cannot go any lower or that the economy cannot get any worse. I have been studying markets and investor/human psychology for far too long to make such a bold claim. But I can make a not so bold prediction that more and more business owners will awaken to the idea that the equity that is trapped in their illiquid businesses is now more important than ever and they will be looking for ways to monetize it in order to meet their personal goals.
Let's face it, the retirement that any business owner contemplated one or two years ago is likely a plan that is residing in the circular file in their office (in case the pun escaped you . . . that is the garbage pail). The security that they thought that they had in their investment accounts is now significantly lower and these owners need to focus on their businesses and the equity in that business once again.
The owner's financial advisor did not create this problem. In fact, even Warren Buffett - the world's greatest investor - was saying last October that it was a good time to purchasing stocks. Simply put, life created this event. This is not a once-in-a-lifetime, but a once-in-three-lifetimes type of event. As advisors and as business owners we have to take this event and learn from it. We need to see what lesson is buried within this calamity. Then we need to use this wisdom and higher understanding to our benefit. We need to convert these unfortunate events into opportunity. We need to be pro-active in our approach, recognizing that others will not be.
Let's talk about the illiquid equity that is sitting in a business owner's business. This is the value of the enterprise, beyond the 'book value' - or the value of the tangible assets (inventory, machinery, real estate, etc . . . ) - that exists within a business. This is not cash flow, which can be extracted from the business. It is the 'going concern' value, the value of the enterprise to produce future profits. Now, an owner cannot pay for his retirement today with earnings to be received in the future, unless he can find someone willing to share in the risk of those profits actually arriving. This is what a business owner accomplishes when they sell their business. They sell to someone willing to assume the risk of the business and pay the owner/seller today for profits to be earned in the future.
Because of the economy and the contraction of credit, there are not a lot of 'buyers' out there today. So, many owners feel as though they do not need to plan for their exit. This is a natural reaction . . . why try to sell something to a marketplace that is not interested in purchasing. But, the critical piece that is missing from this equation is that every decision that the business owner makes from today until the day that they exit their business will impact their exit value.
So, planning for an exit is more than simply taking action when the market is 'hot'. It is just the opposite. A successful exit strategy is one that utilizes these down markets to prepare the business for an exit when the 'window' opens again. And, let's not forget, that selling the business is not the only exit option - again, far from it. However, any exit option needs to consider the underlying viability of the company's sustainability in order for the overall exit structure to be a success. Now is the time to address this sustainability.
More and more business owners are coming to this realization now that they see that there may only be one more exit window prior to them turning 70. In addition, most of these owners do not want to miss the next window in fear of falling into another recession such as the one that we are currently experiencing. These owners need to begin the planning today and it is our job as advisors to assist in raising their awareness to this reality.
Today's marketplace has left quite a bit of debris in its wake. The owner who can dust themselves off, pick themselves up, and move on with their lives will be ready to have the conversation about planning for their exit. There is a pent-up demand that is building for this exit strategy planning advice and it is the wise advisor who invests their time learning about how to have this conversation and how to monetize the concept to grow their practice.
That is what we are covering next week at our Las Vegas Workshop. I am looking forward to this bi-annual event. If you have not made plans to join us already, double-check your calendar and join us in sin city. Each of these events is another big step that we are taking towards advancing our awareness around exit strategy planning and serving the business owners who are in need of this service.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
There is a general feeling that we have suffered the worst of this storm. Moreover, since even Warren Buffett agreed that this economic maelstrom is 'the worst case scenario' that was envisioned, perhaps it is also true that any more suffering would merely be incidental to what has already been felt . . . could this be the tell-tale signs of a bottom?
I don't want to be the fool who says that this market cannot go any lower or that the economy cannot get any worse. I have been studying markets and investor/human psychology for far too long to make such a bold claim. But I can make a not so bold prediction that more and more business owners will awaken to the idea that the equity that is trapped in their illiquid businesses is now more important than ever and they will be looking for ways to monetize it in order to meet their personal goals.
Let's face it, the retirement that any business owner contemplated one or two years ago is likely a plan that is residing in the circular file in their office (in case the pun escaped you . . . that is the garbage pail). The security that they thought that they had in their investment accounts is now significantly lower and these owners need to focus on their businesses and the equity in that business once again.
The owner's financial advisor did not create this problem. In fact, even Warren Buffett - the world's greatest investor - was saying last October that it was a good time to purchasing stocks. Simply put, life created this event. This is not a once-in-a-lifetime, but a once-in-three-lifetimes type of event. As advisors and as business owners we have to take this event and learn from it. We need to see what lesson is buried within this calamity. Then we need to use this wisdom and higher understanding to our benefit. We need to convert these unfortunate events into opportunity. We need to be pro-active in our approach, recognizing that others will not be.
Let's talk about the illiquid equity that is sitting in a business owner's business. This is the value of the enterprise, beyond the 'book value' - or the value of the tangible assets (inventory, machinery, real estate, etc . . . ) - that exists within a business. This is not cash flow, which can be extracted from the business. It is the 'going concern' value, the value of the enterprise to produce future profits. Now, an owner cannot pay for his retirement today with earnings to be received in the future, unless he can find someone willing to share in the risk of those profits actually arriving. This is what a business owner accomplishes when they sell their business. They sell to someone willing to assume the risk of the business and pay the owner/seller today for profits to be earned in the future.
Because of the economy and the contraction of credit, there are not a lot of 'buyers' out there today. So, many owners feel as though they do not need to plan for their exit. This is a natural reaction . . . why try to sell something to a marketplace that is not interested in purchasing. But, the critical piece that is missing from this equation is that every decision that the business owner makes from today until the day that they exit their business will impact their exit value.
So, planning for an exit is more than simply taking action when the market is 'hot'. It is just the opposite. A successful exit strategy is one that utilizes these down markets to prepare the business for an exit when the 'window' opens again. And, let's not forget, that selling the business is not the only exit option - again, far from it. However, any exit option needs to consider the underlying viability of the company's sustainability in order for the overall exit structure to be a success. Now is the time to address this sustainability.
More and more business owners are coming to this realization now that they see that there may only be one more exit window prior to them turning 70. In addition, most of these owners do not want to miss the next window in fear of falling into another recession such as the one that we are currently experiencing. These owners need to begin the planning today and it is our job as advisors to assist in raising their awareness to this reality.
Today's marketplace has left quite a bit of debris in its wake. The owner who can dust themselves off, pick themselves up, and move on with their lives will be ready to have the conversation about planning for their exit. There is a pent-up demand that is building for this exit strategy planning advice and it is the wise advisor who invests their time learning about how to have this conversation and how to monetize the concept to grow their practice.
That is what we are covering next week at our Las Vegas Workshop. I am looking forward to this bi-annual event. If you have not made plans to join us already, double-check your calendar and join us in sin city. Each of these events is another big step that we are taking towards advancing our awareness around exit strategy planning and serving the business owners who are in need of this service.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
Wednesday, February 11, 2009
2-Day Exit Strategies Training Workshop FREE Preview Call with Special Guest Bill Losey
Wed Feb 11 at 3pm EST I will be hosting a FREE call with my friend, and marketing guru, Bill Losey. Pinnacle's Exit Strategies Workshop is 38 days away and we are all very excited about this event and the new additions that will empower you to grow your advisory practice exponentially with this unique and valuable exit planning message.
On this call, you'll get a sneak preview of all the great educational and business building content we will be teaching at the upcoming Workshop on March 19-20 at the Westin Causarina, Las Vegas!
Remember, Pinnacle only hosts 2 events like this per year. Our next big event is not until October - so get involved today and make 2009 the year that you move your business ahead with the business owners who are waiting to hear from you.
Click here to register for the call.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
On this call, you'll get a sneak preview of all the great educational and business building content we will be teaching at the upcoming Workshop on March 19-20 at the Westin Causarina, Las Vegas!
Remember, Pinnacle only hosts 2 events like this per year. Our next big event is not until October - so get involved today and make 2009 the year that you move your business ahead with the business owners who are waiting to hear from you.
Click here to register for the call.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
Monday, February 9, 2009
The Rise of the Internal Transfers
So . . . what the corner office producer at Merrill Lynch knew, that few others were focusing on while the equities markets were in turmoil was rather simple and rather easy to share with those who would listen. He simply said 'buy bonds' (i.e. instead of fixating on the stock market which was a mess). It was that simple.
In a market environment where there was more risk in doing nothing, than in taking definite action, this experienced advisor simply said 'buy bonds'. What was behind this message was the notion that as advisors, we should not get too caught up in all the mess of the marketplace . . . simply 'buy bonds' - offer alternative solutions that are appropriate for the current market conditions.
What are appropriate exit planning recommendations for today's business owners? Well, instead of 'buying bonds' for their liquid assets - let's discuss an examination of 'internal transfers', instead of 'external transfers' as a viable (alternative) exit plan from the business.
First, let's take a look at why advice, such as 'buy bonds', is so difficult for advisors to hear? Well, I believe that many advisors believe it to be their role to get their clients as much return as they can . . . even if they are assuming the risks of the market. Buying bonds was not exciting and it did not require great analysis.
Investors, however, during those turbulent times were becoming less interested in a conversation regarding a return on their investment and were simply more interested in a conversation that focused on the return of their investment.
Now, panicky investors should not, necessarily, drive the investment decisions in a portfolio of liquid assets.
But, think about whether you are working with any business owners who - in this environment - are simply wondering whether they will get any return on their investment. Many are clearly asking where 'the bottom' will be.
If this is the case, and it appears as though 'outside' buyers will be absent from the marketplace for awhile, these owners should begin to consider 'internal' transfer strategies for their eventual exit.
Just like 'buying bonds' was not as exciting as stock purchases, the end result was that this alternative approach - when measured correctly - had a better chance of getting many investors to their goals.
I believe that this analogy rings true for today's exit planning marketplace. Where most advisors, since 2003, were focused on the 'outside' sale of a business (i.e. to an industry buyer or to a private equity group), today's exit planners need to be proficient in 'internal' transfer strategies as well. There are strong comparisons between 'external' and 'internal' transfers and 'stock' and 'bond' markets, let me explain.
Stock investments carry a bit more risk, but potential for a greater return. 'External' transfers - i.e. sales to outsiders - carry the same dynamics . . . finding a buyer, getting financing, negotiating the transaction, and navigating the legal agreements and tax provisions. If you can do all of this, the sales price (i.e. the return) can be greater. But today's environment makes these transactions more difficult than in the past.
By contrast, bond investments carry a bit less risk (at least they did before the sub-prime mess tainted much of the fixed-income marketplace). In any event, bonds are less volatile and have a more predictale return to the investor. And, most importantly, if bond investing gets an investor to their goals, then the question becomes 'why take the extra risk'? 'Internal' transfers - i.e. Employee Stock Ownership Plans (ESOPs), Management Buyouts, and Gifting Programs are similar to bond investing-in this scenario. There can be more control over the transfer and, if the owner can be assured that an 'internal' transfer will get them to their goals, then - like bond investing - why take the additional risk?
So, the rise of internal transfer strategies is likely to be with exit strategy planners for quite some time. With the credit crunch continuing to restrict access to capital, and buyers becoming more cautious about preserving their profitability, rather than expanding through acquisition, the marketplace for exiting owners to sell to 'outsiders' may remain considerably depressed for some time. Therefore, given the sheer number of Baby Boomer who need to begin planning their exits to protect their illiquid wealth, it makes a lot of sense to talk to these owners about 'buying bonds' - or, in this case, examining an internal transfer.
We will be covering internal transfers in depth at Pinnacle's 2-day Workshop in Las Vegas next month. Feel free to join us - and enjoy a FREE month of Membership until that point in time.
And be sure to join us for our preview call with special guest Bill Losey to hear more about how we will also focus your advisory practice on getting and staying in front of these exiting business owners.
Click here to register for our Workshop Preview Call, with speical guest Bill Losey, Wed Feb 11 at 3pm EST.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
In a market environment where there was more risk in doing nothing, than in taking definite action, this experienced advisor simply said 'buy bonds'. What was behind this message was the notion that as advisors, we should not get too caught up in all the mess of the marketplace . . . simply 'buy bonds' - offer alternative solutions that are appropriate for the current market conditions.
What are appropriate exit planning recommendations for today's business owners? Well, instead of 'buying bonds' for their liquid assets - let's discuss an examination of 'internal transfers', instead of 'external transfers' as a viable (alternative) exit plan from the business.
First, let's take a look at why advice, such as 'buy bonds', is so difficult for advisors to hear? Well, I believe that many advisors believe it to be their role to get their clients as much return as they can . . . even if they are assuming the risks of the market. Buying bonds was not exciting and it did not require great analysis.
Investors, however, during those turbulent times were becoming less interested in a conversation regarding a return on their investment and were simply more interested in a conversation that focused on the return of their investment.
Now, panicky investors should not, necessarily, drive the investment decisions in a portfolio of liquid assets.
But, think about whether you are working with any business owners who - in this environment - are simply wondering whether they will get any return on their investment. Many are clearly asking where 'the bottom' will be.
If this is the case, and it appears as though 'outside' buyers will be absent from the marketplace for awhile, these owners should begin to consider 'internal' transfer strategies for their eventual exit.
Just like 'buying bonds' was not as exciting as stock purchases, the end result was that this alternative approach - when measured correctly - had a better chance of getting many investors to their goals.
I believe that this analogy rings true for today's exit planning marketplace. Where most advisors, since 2003, were focused on the 'outside' sale of a business (i.e. to an industry buyer or to a private equity group), today's exit planners need to be proficient in 'internal' transfer strategies as well. There are strong comparisons between 'external' and 'internal' transfers and 'stock' and 'bond' markets, let me explain.
Stock investments carry a bit more risk, but potential for a greater return. 'External' transfers - i.e. sales to outsiders - carry the same dynamics . . . finding a buyer, getting financing, negotiating the transaction, and navigating the legal agreements and tax provisions. If you can do all of this, the sales price (i.e. the return) can be greater. But today's environment makes these transactions more difficult than in the past.
By contrast, bond investments carry a bit less risk (at least they did before the sub-prime mess tainted much of the fixed-income marketplace). In any event, bonds are less volatile and have a more predictale return to the investor. And, most importantly, if bond investing gets an investor to their goals, then the question becomes 'why take the extra risk'? 'Internal' transfers - i.e. Employee Stock Ownership Plans (ESOPs), Management Buyouts, and Gifting Programs are similar to bond investing-in this scenario. There can be more control over the transfer and, if the owner can be assured that an 'internal' transfer will get them to their goals, then - like bond investing - why take the additional risk?
So, the rise of internal transfer strategies is likely to be with exit strategy planners for quite some time. With the credit crunch continuing to restrict access to capital, and buyers becoming more cautious about preserving their profitability, rather than expanding through acquisition, the marketplace for exiting owners to sell to 'outsiders' may remain considerably depressed for some time. Therefore, given the sheer number of Baby Boomer who need to begin planning their exits to protect their illiquid wealth, it makes a lot of sense to talk to these owners about 'buying bonds' - or, in this case, examining an internal transfer.
We will be covering internal transfers in depth at Pinnacle's 2-day Workshop in Las Vegas next month. Feel free to join us - and enjoy a FREE month of Membership until that point in time.
And be sure to join us for our preview call with special guest Bill Losey to hear more about how we will also focus your advisory practice on getting and staying in front of these exiting business owners.
Click here to register for our Workshop Preview Call, with speical guest Bill Losey, Wed Feb 11 at 3pm EST.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide exit strategy planning services to business owners as well as education and training programs for professional advisors. To learn more about John's Exit Strategy Services and his recently published book, "Exiting Your Business, Protecting Your Wealth", visit ExitingYourBusiness.com
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