10 Ideas for Attorneys to Help Unlock Their Clients’ Private Company Wealth

Earlier this week, I was in Boston to speak at the 2016 Spring Symposia for the American Bar Association Section of Real Property, Trust and Estate Law.  The Symposia was held from Wednesday May 11 until Friday May 13.  Wishing all good luck!

I had the pleasure as a non-lawyer to share a session with Edward F. Koren, JD, leader of the Private Wealth Services Group of Holland & Knight.  Our session title was “Unlocking Private Company Wealth: Give me Liberty (and Plenty of Cash)”.  The session was based on my book, Unlocking Private Company Wealth, and our joint experiences over many years.

ed and Chris

The session was well-attended and well-received based on immediate feedback.  Attendees were provided with their personal copies of the book as a handout at the session.

During the session, Ed and I shared the discussion and provided a number of concrete ideas to help attendees with follow-up on our topic of “unlocking wealth” in private companies.

10 Ideas for Consideration for Attorneys Talking to Business Owners

  1. The wealth of private company business owners tends to be highly concentrated in their businesses.  Begin a conversation with client business owners and focus on wealth conversation.  This can lead to further conversations regarding the management of the wealth in their private businesses – which is a different set of activities than managing the businesses themselves. You can go on https://criminaldefenselawyervirginia.com/violent-crimes/ to talk to a lawyer.
  2. Discretionary benefits paid by to themselves by business owners are part of the return from their businesses.  Too often, business owners, particularly in relatively small firms, will pay above-market compensation to themselves and live off that compensation.  It is a good idea for advisers to point out that they are living off of the return of the business, which they hope to help them achieve independence.
  3. Consider using The One Percent Solution to help business owners realize they need to spend time, energy and money to manage the wealth in their businesses.  The One Percent Solution adopts the pricing language from liquid asset management and suggests that owners might consider creating a budget for private company wealth management based on, say, 1% of the value of their businesses (or 50 basis points, etc.).
  4. Use the idea of “interim time” to encourage business owners to plan for and take action for their inevitable business end games.  All any of us has between our current status quos and our business end games is interim time.  There are no pressures or warning bells that say that interim time is fleeting by.  So we have to encourage clients to use their interim time to engage in the wealth management activities that will enable the achievement of successful business end games for all of our clients.
  5. Too many client companies accumulate “stagnant” assets on their balance sheets.  Encourage your clients to get those stagnant, sterile assets off their balance sheets – meaning excess cash, farms, apartment buildings, condos, art, and so on.  Excess cash is problematic when selling a company.  Your clients don’t want to argue with buyers over what cash is necessary to run the business.  Eliminate the question by eliminating the cash.  As for those other assets, they can be deal killers or be difficult to get off a balance sheet during “deal time.”  And getting them off can have adverse tax consequences, as well.
  6. For some business owners, partial liquidity may come from selling minority interests to private equity firms.  An increasing number of private equity firms, in the absence of whole enterprises being offered by reluctant sellers, are acquiring minority interests in private companies.  Encourage your clients to consider all the relevant alternatives for liquidity or growth capital.
  7. Multiple appraiser buy-sell agreements don’t work well in most situations.  The time, expense and uncertainty of these valuation processes make their use problematic in many, if not most, cases.  Make it a point to ask your clients to engage in a review of their agreements with you, perhaps their trusted CPA, and with a valuation professional.  Problems can be identified before there is a trigger event.
  8. Corporate-owned life insurance associated with buy-sell agreements can create problems in the event of the death of an owner.  Life insurance proceeds can be used either as a funding vehicle for use in purchasing the interest of a deceased owner, or as a corporate asset.  When you review the buy-sell agreement and any related life insurance with your clients, make sure that the agreement itself and any related documents are crystal clear regarding the agreed-upon treatment.  If it is not clear, rest assured there will be disagreement in the event of the death of an owner.  The economic difference in treatment can be substantial, one way or another, for the deceased shareholder and all other owners.
  9. If you want until it is too late, it is too late.  The meaning of this is simple.  If your client waits on a needed financing or a management change or a risk adjustment until after the credit crisis, or after the key manager leaves, or until the risk manifests itself, it will be too late to take action.
  10. One of the keys to helping client business owners is to ask questions.  Chapter 20 of Unlocking Private Company Wealth provides has 25 questions for business owners, along with an initial response from me.  If you will read these questions and integrate them into your conversations with business owner clients, you will begin to change the nature of your conversations and begin talking about managing private company wealth.  This will be good for your clients and your business.

Be well,



My two most recent books are available in an Ownership Transition Bundle.  The bundle, priced at $35 plus s/h, has been attractive for many business owners, appraisers and attorneys.


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