On Friday, August 15, 2014 I spoke at a conference of the Society of Financial Service Professionals in Orlando. Florida.  It was the first time I have spoken before this group whose members include many financial planners–all of whom have at least one and many of whom have more than one professional designations.  I attended a couple of sessions before my talk and thoroughly enjoyed the speakers and their content.

An Evolving Topic

My topic is an evolving one for me.  The title of the talk was:

Options for Transitioning the Business: Understanding Baby Boomer Business Owners

Truth in advertising?  I told the group that I didn’t really understand baby boomer business owners, but that I was one and had worked with a large number of them, so at least could talk about them.

The content was a mix of old and new in terms of the content of my presentations.  The topics presented included:

• The Ownership Timeline
• Key Valuation Concepts
• Succession Planning and Ownership Transition
• The One Percent Solution
• Buy-Sell Agreements
• READY for Sale?

Other than the valuation portion, the content was taken from my upcoming book, Unlocking Private Company Wealth, which is scheduled for publication in the next several weeks.

The session was 90 minutes in length, so we had a potpourri of topics blended into, I hope, a consistent and unified presentation.

10 Tips from Chris

An earlier speaker Terry Stanaland, had punctuated his talk by summarizing “15 Tips from Terry” to summarize his topic: “Estate Planning Through the Ages: Challenges and Solutions for Life-Cycle Estate Planning.”

I shamelessly adopted the technique and placed ten summary “tips” throughout my presentation.  Here they are: “10 Tips from Chris About the Importance of Valuation in Successful Ownership and Management Transitions.”

1. The value of and valuation of closely held and family business assets play key roles in virtually all ownership transitions.
2. The value of a business, today, regardless of what has happened in the past, is based on what likely investors expect the business to do in the future.
3. What you (as a business owner) or your clients (for business advisers) think about the value of your business doesn’t matter at all.
4. Valuation lies at the heart of strategies to obtain liquidity and diversification from a private business without selling all of the business.
5. Valuation is necessary to determine the yield or return on business investments, and is therefore necessary for proper portfolio management.
6. The single appraiser, select now and value now valuation process is the best process for the buy-sell agreements of most successful companies.
7. The required valuation for buy-sell agreement valuation processes should be properly defined and tested before any trigger event.
8. Valuation is important when companies issue promissory notes to repurchase their shares.
9. The parties need to agree and to document in advance how life insurance proceeds will be treated for valuation purposes in buy-sell agreements.
10. Annual appraisal is an essential personal wealth management and corporate planning tool for closely held and family business owners.

I like the idea of summarizing key points of a presentation like Terry did in his and like I did above.  I’ll probably use this technique again.  Thanks Terry Stanaland!

As always, please feel free to contact me to discuss any business or valuation-related matter in confidence (901-685-2120).  In addition, do call to discuss management and ownership transition issues.  Or e-mail me at mercerc@mercercapital.com.

Remember, I have a new book coming that I believe you will find useful and an easy read: Unlocking Private Company Wealth: Proven Strategies and Tools for Managing the Wealth in Your Private Business.

If you would like to be put on the list to receive notification of the publication of this new book, please email to my executive assistant, Todd Lowe, at lowet@mercercapital.com (or me, of course), requesting to “Add me to the list.”  We will notify you promptly.

Until next time, be well!

Chris