Clarity brings the best result | Selling a Business

Posted on August 29, 2012 by thecomplexestate

by guest blogger -Paul Cronin – partner, STPI

A few months ago, I wrote about a business broker who called me in a panic on a Friday evening, saying his selling client just called off the sale, for no good reason.  The initial thought was that the owner was not emotionally prepared to leave, so he froze things.  (to read Part One of this blog, click here)

The broker asked the owner to take a questionnaire (The OCR) prepared by STPI and speak by phone with Jack Beauregard (author, founder and CEO of STPI).  The owner did so and spoke with Jack.  There followed radio silence for a few weeks.

I thought that the deal may be dead, but I was puzzled, so I asked the broker if anything had happened, and if he could give us some feedback on his use of STPI’s The Owner’s Clarification System©.  I was expecting a simple note, explaining that the owner needed time to do some personal transition planning, and maybe a nice blurb for our site.

We got much better than that.  Here is a quote from the broker:

“I brought an “above asking price” deal to husband and wife team.  In spite of this, they were doing everything possible to kill the deal.  Feeling like there was something deeper, I reached out to Paul at Successful Transition and we ran the husband went thru the OCR.  Interestingly, by going thru the process the husband uncovered that his wife that was not emotionally ready for him to retire.  She was worried about being left all alone as he went golfing.  The program opened the husband’s eyes to what was emotionally blocking his wife.  Armed with the power of this knowledge they mutually came up with a plan for their future lives.  FYI – I just left the sellers office a few hours ago with a signed P&S and hugs from the wife.   The OCR will become a key step to my process from now on” - Douglas Pendleton/ George & Company whose client recently took the OCR.

It gets better.  I met with the owner of the business brokerage, who was not sure that STPI’s system might work there.  Once he heard about the story, he decided to re-think the whole matter, recognizing that without the questionnaire, he would never have uncovered the real objection:  the spouse’s concern.

Our program is one example of how getting the selling business owner to gain clarity in his objectives as well as possible objections from family members, can be make-or-break in selling a business.

To learn more about the Owner’s Clarification System©, you can request download a free brochure and request a demo at this link.

About our Guest Blogger:

Paul Cronin is partner and Director of Business Development at STPI, the Successful Transition Planning Institute of Cambridge, MA.  STPI provides tools and training to advisors so they may help successful business owners, executives and professionals learn how to “Think”, “Live” and “Decide” what to do with their companies and careers, in order to plan for a dynamic, new life.  Paul can be reached at 978-749-9546,

Filed under: Business Succession Planning | Tagged: , , , , | Leave a Comment »

Advanced Planning When The Boat Is Already Full

Posted on July 10, 2012 by thecomplexestate

Tony DiPalo and Chester Bedloe are classic examples of two completely different clients. Both are business owners that have a great need to plan. However, both have had serious medical issues and are aging; Chester is 67 and Tony is only 52 but he has had a heart attack.

Their advisor has been in discussions with both clients for months now. He has explained the opportunities and the potential downside of not taking appropriate action yet both are stalling.

The advisor shares a quote with me from a book entitled “Free Will” and it mentions how difficult it is to make important decisions when one’s boat is already full.

Two clients with seemingly no motivation. What is an advisor to do?

Get to the heart of the matter.

Many times we approach a conversation with a solution to a problem that does not exist, at least in the minds of our clients.

If we start our conversations with something like this, “What is the single most troubling thing on your mind these days?” we just may get the answer were looking for. Conversation, nurturing and listening can provide opportunity where you least expect it.

Although Tony at 52 suffered a heart attack, he more than likely faced his own mortality but he beat the odds. Advanced planning comes in bite size pieces and as advisors we need to “beat the odds”. Don’t make the mistake of asking a client to bite off more than they can chew or to think about mortality when they are not ready to.

Here are three ways to stimulate advanced planning thinking.

1. The high net worth are concerned about cash flow. Cash flow is the first step in advance planning.
2. The high net worth are concerned about increased tax liability. Reducing income taxes is the second step in advance planning.
3. The high net worth are concerned about lawsuit liability. Asset protection is the third step in advanced planning.

These are all current issues and within them there are emotional issues that high net worth families face. Focus on the current and the future will follow.

 

Kim Hamilton

InKnowVision,LLC

 

Register for the InKnowVision Institute Today

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Shareholder Revolt Leads To Advanced Estate Planning

Posted on December 13, 2011 by thecomplexestate

Allen and Nancy Wilson are 58 and 53 respectively. Both are physicians with a combined annual income of approximately $300,000. Many years ago they invested in a company that was designed to grow through acquisition of other similar companies.

The company now has significant value and generates $4-$6 million in annual taxable income for our clients. The bad news is that the company only makes distributions sufficient to pay taxes on the income.

As a result of shareholder revolt, the company has now agreed to provide an additional $1M in distributions to Allen and Nancy until the expected sale of the company, which should occur sometime in the next 5 years.

Upon sale of the company, there will be an enormous capital gains event for Allen and Nancy. They currently spend about $750,000 per year and expect to be spending their investment account principal over the next few years until the company sells and provides them with a large influx of cash.

This story ended on a positive note. Thanks to the shareholder revolt, these clients were able to achieve significant success through the advanced planning process.

Now onto the remaining five hundred plus shareholders….

Filed under: Advanced Estate Planning, advanced tax planning, Estate Planinng, high net worth tax planning | Tagged: , , , , , , , | Leave a Comment »

Entitlement- Defined by a Parent

Posted on November 30, 2011 by thecomplexestate

Here is the definition by Merriam-Webster’s;

1. A : the state or condition of being entitled : right

B : a right to benefits specified especially by law or contract

2. : a government program providing benefits to members of a specified group; also : funds supporting or distributed by such a program

3: belief that one is deserving of or entitled to certain privileges

Here is the definition provided by a client shared by one of our advisors,

“Whatever I made during my lifetime, my children told me that they are entitled to it when I die.”

And that’s the truth.

Sad to say but we have created a sense of entitlement for our heirs and we have not heard the last of it.  Advanced estate planning and business succession planning bring out the best and the worst in families.  Divisions amongst family members can come at a time when planning needs are at their greatest. Overcoming this obstacle is a grand feat for anyone but there is hope.

Helping clients recognize early on that they can do something productive to ward off the entitlement issue can enhance and strengthen the client advisor relationship.  It can also give clients a peace of mind knowing that there is a process that can help them navigate through difficult conversations.

A word of warning; the entitlement generation is not limited to the “Y”s.  The economy has expanded it to the early age boomers and “X”ers as well.

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth | Tagged: , , , , , , | Leave a Comment »

HNW Women May Hold The Purse Strings

Posted on November 10, 2011 by thecomplexestate

Susan Raymond, EVP of Changing Our World, gave an excellent presentation at the AFP in Chicago on The Coming Gender Transition in Wealth. With the changes in the economy and the world as a whole, it is no wonder that women are more focused on planning than investing. 

George Walper of the Spectrem Group states, “Planning must be much broader” and advisors should “help clients plan for overall life issues rather than asset allocation.”

A pearl of wisdom in an uncertain time.

 

Filed under: Advanced Estate Planning, Business Succession Planning, Business Transition Planning, Estate Planinng, high net worth tax planning | Tagged: , , , , , , | Leave a Comment »

A Matter of Life or Death

Posted on November 9, 2011 by thecomplexestate

It is indeed a ‘perfect storm’ for estate planning and no matter where you turn this is all you read about. Your high-net worth clients are reading about it too. However this does not mean that they will act on this opportunity.

During our recent InKnowVision technical webinar we addressed the uses of GRATs (Grantor Retained Annuity Trusts) in the advanced estate planning process. The use of GRATs are commonly used. Unless tested against or integrated with other advanced estate planning options, a high net worth client and their advising team may never really know the true benefit of this advanced estate planning strategy for the larger estate. In return, this could prove more costly and less effective than the desired result.

Advanced estate planning or high net worth tax planning as some call it, requires the security and peace of mind that comes with protecting cash flow or enhancing it . This can be the deciding factor whether or not a client can or will move forward.

As one commenter put it, “Fabulous idea! Where am I supposed to borrow the money to carry out your recommendations?

By starting with a comprehensive cash flow and balance sheet analysis you can be assured that not only will you find the money to carry out the recommendations, the high net worth client and their advising team will be well equipped to make wise choices in the planning process that can produce the desired results.

Revisiting where you start the advanced planning process can be a matter of life or death…. tax that is.

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, charitable planning, Estate Planinng, GRAT, High Net Worth, high net worth tax planning, Legacy Planning, philanthropy | Tagged: , , , , , , , , , | Leave a Comment »

Is Advanced Planning Discretionary?

Posted on November 1, 2011 by thecomplexestate

Not a week goes by where this isn’t some communication about the estate tax; the good, the bad and the ugly.  It is tied to deficit reduction, holiday giving, history, and how to correctly “soak the rich”.

This communication has a direct impact on us. During the next three to four weeks InKnowVision will receive, more than likely, ten or more calls from advisors whose clients want to do year-end planning. If history repeats itself, then at least three of those will be planned for and implemented.

When was the last time you heard a business owner say something like this,

“I owe it to my 200(+) employees to keep them employed. I’ve already made it.  All I want is enough to support my current lifestyle so that my wife and I can enjoy our final years together.  Help me to create a plan to make this transition so I can feel great about its outcome.”

                                                            Owner, $80M manufacturing company

InKnowVision Case 2011

Times like these do not lend themselves nicely to “discretionary” advanced planning. There is too much at stake.

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth, high net worth tax planning, Legacy Planning | Tagged: , , , , , , , , , , | Leave a Comment »

A Sad Response

Posted on October 21, 2011 by thecomplexestate

This week I read question posed by a colleague on LinkedIn.

“What’s holding you back from creating an estate plan?”. Several people responded.  This particular answer posted by a business owner was troubling. Here is what he stated…

  • Since I am going to live forever, why do I really need to be concerned? Let other people be concerned about mortality instead.
  • I don’t want to be bothered by accountants, lawyers and financial planners.
  • The estate tax guidelines seem to be attracting more government attention recently. Because of that, it can be tough to stick to a long-term plan that could be made useless.
  • With some effort, it may be possible to identify investment “vehicles” that offer tax benefits and probate-avoidance benefits without having to deal with outside “professionals”.”

It sounded like this business owner dislikes advisors. Although he does not say why and quite frankly it does not matter. It does raise a question. Are we doing the best collaborative job possible in addressing our client’s concerns?

No one wants to be “bothered” but everyone wants to be served.

Filed under: Advanced Estate Planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth, high net worth tax planning | Tagged: , , , , , | Leave a Comment »

Is A Business A Wealth Transfer Tool?

Posted on October 10, 2011 by thecomplexestate

When was the last time someone gave you permission to do something unexpected?

I had the opportunity to hear Tom Deans, author of Every Family’s Business, share the tale of the shirtsleeves to shirtsleeves in four generations. But Tom’s family did it their way and not how you might think.

His great grandfather, grandfather and father understood business was a wealth creation tool, not necessarily to be gifted as an inheritance. They also understood that some businesses are not built to last.  As a matter of fact, they took the position that it was better to cash in and create new companies given the opportunity while granting permission to do so.

What questions are we NOT asking of our business planning clients that can give them the freedom to choose to transfer their wealth or their business.  If we are not asking the right questions then everyone looses.  Just ask the nine million business owners who are looking for your help.

Filed under: Advanced Estate Planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth, Legacy Planning | Tagged: , , , , , , | Leave a Comment »

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