Voices: Mark Tepper, on Life After a Client Sells the Business

‘We begin helping clients with that process two to three years before they’re even ready to sell’

Voices is an occasional column that allows wealth managers to address issues of interest to the advisory community. Mark Tepper is president of Strategic Wealth Partners in Cleveland.

For clients who are walking away from a business, their emotional state is often a bigger issue for them than whether or not they have enough money to move forward into the next phase of their lives. Many clients are in a veritable state of shock when they let go of the daily responsibilities of managing a company.

The businesses they’ve built are their babies. They’ve formed strong relationships with their employees and colleagues, so there’s often a social aspect of going to the office each day. And suddenly, all of that disappears.

To help clients maintain their emotional health through that transition, advisers can help them visualize life beyond their business. Clients need to determine for themselves what it is they’re most passionate about and what goals they can pursue to keep them interested and engaged.

Without good planning, we see lots of clients who have sold their business get bored within a year or two and start looking for another business to start because they don’t know what else to do with themselves. Therefore, it’s important to engage those clients in discussions about what life is going to look like after their exit.

We begin helping clients with that process two to three years before they’re even ready to sell. In addition to financial and valuation planning, we work with clients on life planning—figuring out what and who they care about and what they want to do for themselves and those individuals in the future.

If you start those discussions while clients are beginning negotiations with potential buyers, they rarely get the time and energy they deserve. So we start tackling many of these issues in our very first discovery meetings with prospective clients.

It’s also a good idea to plan for contingencies. As I mentioned earlier, the fallback plan for many business owners who feel lost or unfulfilled in retirement is to buy another business. Because of that impulse, I encourage clients to separate the net proceeds from the sale of their business into two buckets. One bucket contains their retirement assets, and the other contains their venture fund.

I explain to clients that if they want to start another business at some time down the road, they can draw on that venture fund to support it. But if the project doesn’t go as planned and the bucket is exhausted, they cannot dip into their retirement savings to keep that new venture afloat. Most clients acknowledge that possibility and will appreciate the forethought of putting a provision like that in place.

Advisers should remember that a successful business exit is rarely defined by a dollar figure; it’s about a client’s happiness and fulfillment in his or her life after the sale. That’s why it’s important for advisers to start early in helping clients define what they want from life after the sale and encourage them to pursue those passions within the context of their financial plan.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.