SRG Off Script: RIA Tax Considerations with Succession and Selling
Watch Recording https://youtu.be/cUibsAlOPA8 As an advisor, you know that selling/buying a business is a major step for any founder/owner. Between the valuation, timeline, cash flow analysis, deal structure, and contracts, it’s enough to make your head spin. But, one of the most overlooked parts of M&A and succession planning is the tax strategy and how to leverage it to your advantage. Date: Thursday, April 13th, 2023Time: 11 a.m. PST / 1 p.m. CST In this SRG Off Script, we will answer your questions on the various tax considerations when selling a business or sharing equity. If you’ve ever wondered how to maximize the tax result in a sale/merger, how to get long-term capital gains, the nuances of family succession planning and taxes, or even just the right entity structure to minimize taxes, this is the session for you. Submit your question(s) at registration or live during the webinar! SRG Off Script is a monthly webinar series hosted by President David Grau Jr. David along with other industry experts provide insight and address questions related to all stages of managing a financial practice. Have a request for future SRG Off Script session topics? Let us know at registration or email marketing@successionresourcegroup.com Host David Grau Jr. MBA CEO/President Paper-plane Linkedin-in
SRG Off Script: Succession & Equity Sharing Q&A
https://youtu.be/L87GvTcmIeg In the latest monthly webinar series titled SRG Off Script, David Grau Jr. answers your questions surrounding succession planning best practices, equity-sharing strategies, and other ways to attract and retain top talent. Submit your question(s) at registration or live during the webinar! SRG Off Script is a monthly webinar series hosted by SRG President David Grau Jr. David along with other industry experts provide insight and address questions related to all stages of managing a financial practice. Have a request for future SRG Off Script session topics? Let us know at registration or email marketing@successionresourcegroup.com Learn more about SRG’s services: Succession Planning & Equity Sharing. Schedule your free consultation today! Presenters David Grau Jr., MBA President/Founder
The Challenges in Succession Planning and How to Avoid Them
Introduction Outlining strategic objectives and planning for the company’s future with a solid succession plan are both tasks that every business owner should undertake at some point. However, simply doing it doesn’t guarantee a successful transition plan; succession planning poses many challenges and potential pitfalls of which financial advisors need to be aware. Pitfall #1: Key Positions Need to be Redefined as the Company Changes This is a common mistake when business owners do succession planning early in the company’s history and never revisit it. Professional development happens, so team members designated as business leaders today may be on a different career path tomorrow. It’s important to revisit your succession plan regularly and make changes as the company evolves. Make a list of potential successors if you’re a larger organization. Monitor employee performance and shorten the list as time goes by, but it’s not necessary to find the “right person” early in the process. Look for employees that achieve success in smaller projects and gradually add them to your leadership team when you deem them worthy. Potential Pitfall #2: Procrastinating About the Succession Planning Process Effective succession planning begins with making the decision to move forward with it. Every business owner knows that they “should” do it as soon as possible, but it’s easy to procrastinate and put off the future needs of the company when you’re occupied with critical decision-making during the business day. Succession plans seem like a task for “later,” when in fact they should be worked out before the company opens its doors. Put it under “development plans” and get it done asap. Potential Pitfall #3: Choosing Someone “Just Like You” to Take Over When evaluating internal candidates for succession, most business owners tend to look for someone exactly like themselves, a “clone” that will somehow duplicate your success with the next generation of the company. Looking at your top talent or potential buyers this way is a mistake. You might just miss something in the other candidates while you’re looking for that perfect fit. The next mistake smaller firm owners make is to think too small. The succession plan is limited to their network of business associates, partners, or competitors and may end up selling to friends or lowball suitors because they think their firm is “too niche” or doesn’t have intrinsic value in their market. When it does come time to sell, these firms often sell for much much less than they would if they had an advocate pulling together offers. Potential Pitfall #4: Having a Succession Plan, but not a Succession Strategy Succession planning programs need to incorporate a succession strategy. Many business leaders treat their succession planning like a daily to-do list, adding bits and pieces to it as they come to mind. The result of this is a body of work that is incohesive and doesn’t really outline a clear path for transition or direction for the HR Department. The succession planning processes you incorporate into a plan should be clear to members of your leadership team and the HR professionals who will need to promote or terminate employees during a transition process. The plan should also outline your business goals, keeping everyone on the same page to avoid potential disruption. Potential Pitfall #5: Bypassing the Valuation Process Valuation is one of the succession planning challenges that is often overlooked or outright ignored because it’s a common practice to use hypothetical values. That might be okay for smaller organizations, but any company with a leadership team and high potential employees needs to have a clear idea of what their true value is. Few organizations truly understand this. A common business case where this becomes relevant is when a member of the leadership team is talking about succession and the subject of a buyout comes up. How can you discuss this if you have no idea what the company is worth? Even if the acquisition wasn’t part of the company’s future plans, you’ll still want to discuss it. Valuations should be done regularly. Potential Pitfall #6: Failing to Update the Succession Plan Treat your succession plan as a living document and update it frequently as the company grows and changes. What’s good for today’s business situation may not be the right fit for tomorrow. It’s called a succession planning process because you’re never completely done with it, at least while you’re still in business. The end comes when you make your exit. Most companies do regular performance reviews for their employees. Treat your succession planning the same way. Schedule specific times of the year to go over the plan and make changes when necessary. Some firms will do this quarterly if their growth rate is high or they have an acquisition or merger strategy in place. This should not be ignored. Potential Pitfall #7: Relying on Past Performance What have you done for me lately? As a company adds more employees, the big picture changes. The same thing happens when current employees learn new skills. It should be possible for those who work for you to achieve success and be considered for future leadership positions. Successful companies set this up as an open process for all. Often at the same time, newer employees are making a name for themselves, established employees could be slacking off, living on past achievements. It’s important to have a performance management process where you evaluate the “go-getters” and identify those who are slowing the company down. This information should be considered when you update your succession plan. Potential Pitfall #8: Focusing Only on Executive Level Positions The succession planning process shouldn’t be limited to executive positions only. When a firm grows, there should be an established hierarchy that shows employees what they can aspire to. This motivates them to try harder because there’s an obvious reward available when they’re successful, namely a promotion and a pay raise. For solo practitioners, you only need to worry about replacing yourself and distributing your assets if something unfortunate happens
7 Steps to Successful Succession Planning
The exact details of a succession planning process are determined by the size of the firm and the urgency with which successors need to be chosen. With an aging workforce, the need for speed is greater. It is less pressing when key positions are filled by younger executives.
Succession Planning and Management Process
While financial advisors get paid for helping their clients make sound financial decisions and plan for retirement, they themselves are also faced with these same challenges in regards to their own practices. Premature death or accident are an unpopular topics under any circumstances, but nevertheless, they are subjects that need to be addressed so that loved ones and business interests are taken care of after death.
Powerful Succession Planning Tools You Need
The creation of a succession plan for your business should not be considered an optional exercise. It’s a task that owners and executives must complete for the sake of their employees and shareholders. Think of it in terms of establishing a legacy for yourself.
Sunset vs. Succession: Realizing the Value of a Career in Financial Advice
Download Your White Paper! Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form. Name * FirstLast Phone Work Email *How Did You Hear About SRG? *— Select Choice —ConferenceDirect MailExisting/Past ClientGoogle AdWordsOtherReferralSocial MediaSeminar/WorkshopWebinarWebsite Download Plan Your Exit with Full Information In recent years, expanded access to capital and advances in advisor technology have allowed independent practices to become increasingly transferable. This gives selling advisors more options in exiting the business and transitioning their practice to a successor. To help you plan for your exit, this white paper provides a close look at the benefits of independence followed by a sale of the business to a successor, as opposed to a traditional corporate sunset plan. Fill out the form to download the report.
Five Myths in Succession Planning that Lead to Mistakes
As most business owners will attest to, starting and running a business involves a combination of conviction/passion, perseverance, stress and personal sacrifice. Owners invest a significant amount of themselves and capital into running these businesses, and as a result, most have a substantial portion of their net worth tied up in their business. The vast majority of owners/founders we’ve worked with here at Succession Resource Group have communicated that their business is not just a valuable asset, but their most valuable asset. So, why do so few owners have an answer for their key stakeholders about when they will retire from their business and who will succeed them? Many Financial Advisors make preventable mistakes in succession planning because of common myths giving them a sense that they can deal with this topic tomorrow. Here are the most commonly believed succession planning myths that hold business owners back from effectively tackling this important topic:
Should I Stay or Should I Go?
The market for advisor practices was set to be a record year in 2020 based on closing 2019 out on a high note, with valuations and deal terms as good as they have ever been. Fast forward three months and COVID-19 has eroded all these gains and left many advisors reeling and re-evaluating. As an advisor thinking of phasing out over the next few months or years, you are probably thinking, “Great, now what?”
Secrets to a Successful Succession
Great article from Matthew Halloran on succession planning. He makes 10 good suggestions for buyers/sellers to be thinking about, here is a quick summary: