Planning an Exit Requires a Relationship, Not a Transaction Mindset

Planning an Exit Requires a Relationship, Not a Transaction Mindset

ID-10022459 For business owners who are thinking about exiting their business in the near (or not so near) future, there are many things to consider to assure the business transition happens smoothly.  Owners are wise to seek the counsel of advisers in this complex and delicate area.  While discussing an exit with a professional adviser, owners are well served in asking how the adviser with whom they are speaking perceives his role and how that adviser is compensated.  This newsletter makes the argument that, in order for a smooth process, owners should seek the counsel of “relationship-based” advisers rather than “transaction-based” advisers to create and begin implementing a multi-year exit planning process.

Understanding an Adviser’s Role in an Owner’s Life

Advisers enter a business owner’s world mostly on a reactive basis, usually because there is a need for assistance with an outstanding issue.  As an example, for some owners the relationship with their accountant is the most consistent simply because ID-100224538state and federal governments require, at a minimum, businesses and their owners to file taxes each year.  This is a reactive (albeit very important) approach to working with an adviser.

However, some business owners buck this trend and actually take a proactive approach to working with their advisers, including a commitment to planning for the future.  These owners recognize the importance of “staying one step ahead” and they seek the best advisers for their short-term and long-term needs.

The Relationship-Based Adviser versus the Transaction-Based Adviser

Given that most owners work with professional advisers, it is helpful to categorize them.  The world of professional advisers can be neatly divided into two (2) types:  relationship-based advisers and transaction-based advisors.

A relationship-based adviser comes into the business owner’s life and works with him, year-in and year-out, on a consistent basis.  Two of the leading relationship-based advisers are accountants and wealth planners (performing true, ongoing wealth planning).  Many owners also confide and place their trust in attorneys, insurance and risk management advisers as well as general business coaches and consultants.  These advisers take the approach that a relationship with a business owner exists over a long period of time and they remain available to these owners as needs arise.

Transaction-based advisors are those who approach their client relationships with an eye towards addressing a specific, non-recurring issue for that owner.  These advisors might include real estate brokers, consultants who start and complete certain projects for owners, valuation professionals as well as mergers and acquisitions advisors.  These advisors enter the lives of owners to execute a certain transaction.  For the most part, these advisors also plan to leave the owner’s life shortly after the transaction/project ends.

Exit Planning is a [multi-year] Process, Not a Transaction

The process of exiting a business is not a transaction, but rather a process.  The process includes an owner thinking through all of the implications of the business running without his individual efforts and how the owner would live without the business.  Owners who go through this process ask themselves, “Who will run the business other than me?” and “What would fill my life in the absence of working in the business?”

ID-100165618Answering these seemingly simple questions and planning a separation from your business has a high level of complexity that takes time to understand and, once understood, to make critical decisions around.  Unlike a transaction, the exit planning process requires the benefit of time and self-reflection to decide what is best for you both from a business and a personal perspective. This newsletter suggests that a relationship-based adviser is a critical partner in helping to gain clarity around these issues.

Nevertheless, an exit planning process may very well end with a transaction.  When this occurs, those transaction-based advisors are invaluable to the process of completing a deal.  However, there are a few important caveats to remember:  (1) a transaction is the output of the process, not the immediate objective and basis for an engagement, and (2) the transaction-based advisor can learn from the exit planning process to execute on the transaction that best meets your goals.

Why Relationship-Based Advisers Are Ideal for Exit Planning

Given that exit planning is a process, it is important for owners to have a trusting relationship with the adviser who guides them through this multi-year process.  Relationship-based advisers set up their businesses to view clients as “lifetime clients.”  And, as an owner going through an exit planning process, it is likely that you will want time to answer the sensitive questions that await you.  Your relationship-based adviser will take the time to help you reach your long-term goals while transaction-based advisers, generally speaking, are not equipped to conduct a multi-year process to guide an owner in this way. Rather, many of these advisers would prefer to be called at the time that a transaction is ready to be executed.  If you find a transaction-based adviser who is truly willing to serve in a relationship based way you should consider yourself fortunate as these advisers are hard to find.

Concluding Thoughts

This newsletter is not written to judge one type of adviser as better than another.  Rather, it is crafted to remind owners that an exit planning process is one that should not be conducted alone and should include the patience and approach that relationship-based advisers bring to the owner.  We hope that you find this helpful in advancing your exit planning forward.



N. Perry Moore, CBEC, CFP®, ChFC® (Bio)

Director of Wealth Planning

Direct Phone: 812-602-6306



The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements. The information does not attempt to examine all the facts and circumstances that may be relevant to an individual’s financial needs. Payne Wealth Partners, Inc. is not soliciting any action based on these statements.

Contact Our Offices

Payne Wealth Partners, Inc.
Keystone Financial Consulting
601 N Cross Pointe Blvd
Evansville, IN 47715
Phone: 812-477-6221
Toll Free: 888-477-6221
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