How can a wealth manager help a Canadian business owner exit their business?
“I'd like to leave or sell my business — can you help me?” This question is increasingly on the minds of baby-boomer-aged business owners. A wealth manager plays a distinct and valuable role in the sell-side process: informing and educating you about the process, facilitating introductions by coordinating with you and your other advisors, and providing the services that ensure a successful personal and financial transition from the business. The wealth manager focuses on what happens to you and your family's financial security — before, during and after the sale.
What are the five areas where a wealth manager adds value in a business exit?
1. Establishing goals and objectives
- Advise you on how to quantify your goals and objectives
- Perform a financial-needs analysis to determine retirement income needs and wants
- Review and offer advice on personal investment strategies aligned with your plan
2. Determining the value and price you need
- Determine the current amount of your investment assets
- Determine the level of income needed — and the level wanted — after your exit
- Prepare a financial plan for you and your spouse
- Discuss your tolerance for investment risk both pre- and post-exit
3. Protecting and growing your value
- Discuss, design and fund non-qualified employee benefits, such as deferred-compensation plans
- Discuss, design and fund qualified retirement plans, such as defined-benefit plans
4. Contingency planning for the business
- Determine the amount of proceeds available to your surviving spouse if continuity plans are exercised
- Determine whether additional capital and income are needed — will there be enough income for the family based on available assets and your financial-independence goal?
5. Wealth preservation planning
- Review your estate plan at the outset of the process to ensure consistency with your objectives
- Determine the amount of capital your surviving family needs to ensure their financial independence
Why involve a wealth manager early in the exit process?
The sale of a business is the moment an owner converts an illiquid operating asset into liquid wealth — often for the first time in decades. Decisions made before the sale (deferred-compensation design, retirement-plan funding, estate-plan alignment) and immediately after (how proceeds are invested and protected) compound over the rest of your life. Involving a wealth manager at the outset, alongside your M&A advisor, accountant and lawyer, ensures the deal is structured to meet your personal financial-independence goals — not just to maximize the headline price.
What are the next steps?
The areas above outline the involvement and work you can expect from a wealth manager. The list is far from exhaustive, but it includes the more commonly implemented tools and techniques. A business valuation guide is available as a free resource exploring valuation preparation, methodologies, valuing intangible assets, valuation mistakes to avoid, and the distinction between price and value — along with an offer for a confidential custom business valuation.
Key facts: how a wealth manager helps you exit your business
Role: informs and educates on the sell-side process; coordinates with your other advisors; ensures a successful personal financial transition
Five areas: establishing goals/objectives, determining value/price needed, protecting and growing value, contingency planning, wealth preservation
Financial-needs analysis: determines retirement income needs and wants for you and your spouse
Contingency planning: ensures proceeds and income protect a surviving spouse and family
Estate planning: reviewed at the outset to stay consistent with your objectives
Timing: involve a wealth manager early, alongside your M&A advisor, accountant and lawyer
About The Shaughnessy Group
Founded in 2017 to help business owners successfully transition out of their most valued asset — their privately held, lower-middle-market company — and to help them grow through acquisition and source debt to fund acquisitions. shaughnessy.group.
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, investment or financial advice. Consult qualified advisors regarding your specific circumstances.
