Advisor Exclusive: Creating a Successful Continuity Plan

Media Thumbnail
  • 0.5
  • 1
  • 1.25
  • 1.5
  • 1.75
  • 2
This is a podcast episode titled, Advisor Exclusive: Creating a Successful Continuity Plan. The summary for this episode is:
How can I prepare for a "hit by the bus" scenario and not hamstring myself when it comes to sell?
01:00 MIN
How long should you be preparing to secure financing for your succession plan?
01:51 MIN
How does owning an RIA impact a traditional continuity plan?
01:05 MIN
Do I have to have an evaluation before securing transition plan financing?
01:15 MIN
Do practices that change hands through death and disability succession plans capture lower mulitples than practices sold while the founder is fully capable?
01:18 MIN

Tony Whitbeck: Well, good afternoon, everyone. This is Tony Whitbeck, I'm the CEO of Advisor Legacy. And with me today is both Todd Doherty, he's our M& A Expert, and Adam Farag from Oak Street Funding. And today we're going to talk about continuity planning and how to protect your biggest asset, which is likely your practice. I'm going to set up today's webinar, and then I'm going to turn it over to Todd. And Todd's going to take us through some of the continuity portion of the presentation. Adam's going to talk a little bit about lending, and then we're going to wrap it up and have a Q&A at the end of the session. So all of the telephone lines are currently muted. And if you'd like to ask a question, the best thing to do would be to type that question into the go- to webinar control panel. You can type it in throughout the course of the presentation, and then at the end, we'll address all of those questions. So just to give you a little background on Advisor Legacy, we are a full service M& A firm that deals primarily, almost exclusively in the financial services business. We do a little bit of work in the CPA practice area, but 99% of what we do is in the financial advisory space. And we really offer all types of services, really anything you can think of in the M& A space. So it doesn't matter where you are in the stage of your career. If you're trying to grow and scale your business, or you're trying to preserve your brand, or you're at the stage where you're leaving the legacy or transitioning, we have a service. So we have acquisition consulting, where we can help you put together an acquisition strategy. We have buying opportunities on our Advisor Legacy sales platform, where we can bring practices that are for sale to you. We offer both legal and lending support. So we partner with folks like Adam at Oak Street to help with the lending needs for acquisitions. We do continuity planning, which shouldn't be a surprise since that's the topic for today. And we offer deal support, if you are a seller and you found a buyer or vice versa, you're a buyer and found a seller. We can help you put the deal together. We do a lot of business valuation work. We do 4 to 500 valuations a year on financial advisory practices. We also do internal and external succession planning and succession planning is different than continuity planning. Continuity planning is to protect the value of your practice in the event of death or disability. And succession planning is something that you start typically, about five years before you're going to retire and start developing the next generation for your practice. If you're at the stage of your career, where you're looking to transition out of the business, and more and more people are hitting that retirement age. We can help you find a buyer, again, through our Advisor Legacy sales process, we have thousands of qualified buyers and we can help match you with the best fit. If you already have a buyer in mind, we can help you handle a sale, mention deal support. We also have legal support in the sense that we can do all the legal agreements for you when you're putting together an acquisition or a sale. And we even offer escrow services. Typically, when lending is done, a portion of the purchase prices held in escrow to satisfy the attrition clause. And so, we offer an escrow service as well. So that's, just a little bit about us. Again, there's really not a whole lot we don't do in the M&A space in particularly for financial advisors. So I'm going to set the stage today with a little story. And so this was a story about Patrick, and he's been an advisor for 24 years. He's built this practice that has 92 million in AUM and 750, 000 in revenue. Unfortunately, three weeks after he celebrated his 58th birthday, he died very unexpectedly. Well, as you can imagine, his wife, Linda, is certainly a little emotional at the time and suffering a great loss. And she really isn't sure what she should do or what the practice is worth. And Linda was not part of the practice. And Patrick ran the business and Linda ran the home and she really doesn't know what to do with the practice. But fortunately, another advisor Phil, contacted Linda and offers to buy the practice for a million dollars. Well, if you know anything about valuations, if practice generates$ 750,000 in revenue, it's probably worth substantially more than a million dollars. But he says that, he'll ensure that the clients are taken care of and she'll have nothing to worry about. Well, there are some other people that are pulling on Linda in different directions. So her daughter, Melanie, she wants Linda to sell the practice so she can live off the money. The son, Nathan, who's still in college, wants her to keep the practice until he finishes college so he can take over. But of course, you know that Linda's not licensed. She can't take over the practice, and so that's not going to be a reality. And then Linda's parents who are also Patrick's clients, they want to know what's going to happen to their investments since Patrick is no longer around. And all of these things could have been answered, had Patrick had a continuity plan in place, but he didn't. And he died relatively young at age 56 and very unexpectedly. So Linda's in a tough spot. She's got an advisor willing to Linda to offer a million dollars, which is way under value. And she's got three of her close family members that are all concerned about different things. So for those of you who work, either are an RIA or an IAR or you work for a broker dealer with an independent model, it's really your responsibility to put together your continuity plan. The RIA or the broker dealer typically is not going to do that for you. They may give you some templates that you can use, but a template is only that, a template. You really need to have something that's customized to meet your specific needs. What we have found is that just like the cobbler's kids has no shoes. We find the same thing in the financial services industry, that a lot of financial advisors do not have a continuity plan or succession plan. And yet, they help their own clients prepare for the unplanned events like death, disability, long term care, unemployment, etc. It's ironic, but it's the case. Let's take a look at the statistics. Only 18% of financial advisors have a succession plan. And those who are less than five years from retirement, believe that an unknown 59% of the buyers will be an unknown outside person. They don't know who it is, but it's not someone inside their practice, they haven't developed a successor. And then, 30% will go to an internal successor. So only 18% have a plan. And 59% of those 18% don't know who that person is going to be, but it's going to be someone outside of the practice. So what does the lack of planning cost or how much does it cost? Well, it costs a lot. Without a continuity plan, there's less likelihood that the staff is going to be retained. If the advisor dies, the staff might immediately start looking for other employment. But if they know there's a new advisor stepping in to take over and I can guarantee you that new advisor is going to want to keep the staff, there's a high probability, the staff is going to stay. The other thing is that if it's planned in advance, you are more likely to have a successor or continuity partner with the same personality. And they're going to be a better fit for your clients because it's a planned event versus struggling to find someone that's willing to pay something for the practice at the death or disability. Also, clients are less likely to stay because it's going to take longer to get that practice transition to someone when you don't know who it is. And if the successor were to come in right away, there's a good chance that the clients are going to stick around. And we often encourage our advisors to share with their clients that they have a continuity and a succession plan, and that can actually lead to growth. And I'll talk about that in a minute. And then finally, the multiplier people always talk about what are the multiples for value of a practice? Well, there's a good chance that a buyer is going to pay less for it, if it's what I call fire sale. And those that are actually in a continuity agreement have already agreed to what the purchase price is going to be. And that price is more than likely going to be higher than if you were to sell it on the open market after the person has deceased or become disabled. So when you look at all four of these things, the value of your practice without a continuity plan can be a heck of a lot less than what it is with the continuity plan. So with that, I'm going to turn it over to Todd. Todd's our M& A expert, he does the vast majority of our business valuations. And he's going to talk to you more specifically about continuity planning, so Todd.

Todd Doherty: Thank you, Tony, and thanks to all of you who joined the call today. To provide a little context, over the years, I've been involved in quite a number of death and disability practice sales, where the advisor did not have a continuity plan in place. And probably more than I'd like to remember actually. Those stories are always difficult, sometimes they're tragic. And today, we're talking a lot about how to protect yourself from those unfortunate outcomes. But there's also a positive side to having a plan in place and communicating that plan to your clients. One of the positive outcomes certainly is, it really facilitates the growth of your practice. And this is something that oftentimes people don't focus on, but it's absolutely true. If you are an older advisor, gray hair, probably getting closer to retirement age, I can guarantee you that your clients are wondering what is your plan? If you haven't communicated one and what's going to happen, if something happens to you. And if that item remains a question mark, those same clients are far less likely to refer their friends to you or even their own heirs to you because they don't know if you're going to be around to service those folks. And so having a confirmed plan in place, communicating that plan to your clients and really setting yourself up as a legacy practice that will be around or have a partner that will be around to serve your clients for the rest of their life and hopefully their heirs as well, really facilitates the growth of the business. And we've heard stories very specifically from advisors who have completed their plans that, that's exactly what happened. And oftentimes, the clients never mentioned it to them, but they were always thinking it if the advisor is getting near that retirement age. So let's do a real simple self check if you will. And I hope that you'll ask yourself these questions as I go through them. And there's really four simple questions that need to be addressed. The first question is, do I know what would happen to my practice and the event of death or disability? Which is what we refer to as a continuity triggering event. Second question, who is your point person? And I would say, probably you would want to have ideally an internal point person in your practice who knows what to do and where to go. And then, an external point person who would be your continuity partner. That's the person that you would hold your agreement with. Question three is, do my family staff and clients know my plan? And I'll talk about the fact that, that's probably the least executed part of a plan is the communication strategy. And then lastly, would people be able to find my stuff? Where are the documents housed? Who has access to those things? There's a lot of other supporting documents that we'll point out that you should have securely stored and available to those key contact people. If you can't affirm all four of those questions, maybe you answer yes to a couple and no to a couple of those. Then either you don't have a plan at all, or you might have a plan in place that's not fully completed. And hopefully, you'll learn the steps of having a fully completed plan through today's presentation. So when we think about what makes a good continuity plan, I really like to think about three equally important consideration. First, it protects the key business relationships that you have, and those relationships are certainly those with your clients and also your staff. So the plan protects those two groups. Second, it protects the equity in your practice. And as Tony mentioned, the equity and the practice given that the average practice valuation currently is around 2. 5 million, is generally the advisor's largest personal asset. Or certainly one of their personal assets and protecting that equity is quite important for your estate and your family. Certainly, you don't want to lose value as a result of what we refer to as a fire sale. And then lastly, it protects your family and estate in the event of your death and disability. Obviously, that's going to be a very emotional event for those that are close to you and you don't want to add additional challenges by asking them or leaving it to them to figure it out, frankly, they won't be able to. And so, they're going to rely on third parties to bail it out and that's not the ideal outcome, certainly. So when we look at what is a good plan versus a not good plan and certainly the not good category generally, means that the plan is in the advisor's head. And I can't tell you how many times I've asked advisors, do you have a continuity plan? And oftentimes, they'll answer yes. And then if I ask them, if they have a formal written agreement, the answer is no. If you don't have the latter, you don't have a plan. And oftentimes the answer is yes, because they filed a form with their broker dealer or other party, basically that states here's where my clients will go, but that's not the same thing as having a plan. It doesn't really define the sale and all the other needed elements that go into a good plan. So let's look at what those elements are. The first is to have a formal written agreement and that agreement is completed by an attorney. We've seen a lot of DIY efforts in this space and largely, that's because advisors have sourced some type of template. Maybe they found that online, or they got it from their broker dealer or other resource. And they thought it was okay to fill out that template themselves. Well, those templates generally say all over them, do not do this without the help of an attorney, and there's a good reason for that. They generally omit the terms of the deal very specifically, because the person providing the template doesn't want to be responsible for defining the terms between two business owners. So you definitely want to have a written agreement completed by an attorney, and it should also be supported by a current practice valuation, which is updated periodically. Generally, we recommend maybe every three years to update the valuation and then update the formula of value in the agreement. The second item is communicating the plan. And as I mentioned earlier, that's probably the one step that's most often overlooked and not executed. And I think the reason is, people are really happy to have check off their list that they've completed the agreement, but then they don't follow through with the rest of it. And communicating the plan is what makes it most useful, and again, it's often the most missed. So it should certainly be communicated to your clients, to your staff, to your family, probably a state attorney as well. And all of those people should know exactly what will happen if there is a triggering event. And then lastly, you want to have all of your documents related to the plan and those that support the transition in the case of your death of disabilities, securely stored, and available to the key people who need to execute, if in your absence. We'll talk more about what should be stored in that space. So let's go through a few of the key elements that go into a continuity plan. I don't want to go through all of these items, but just some of the main ones. So define triggering events. And I want to differentiate between what we refer to as a continuity plan, and what often is referred to as a buy- sell agreement. A continuity plan is defined as a plan that protects you in the event of death and disability, but would not define the sale of your practice in a voluntary succession. Whereas a buy- sell agreement as we defined it, addresses continuity of death and disability, but also can address the succession of your practice by defining the continuity partner as your ultimate successor. Or maybe just giving them the right or first off or our first refusal in that same agreement. And those two things are often interchanged when people use the descriptions of them. So I think it's helpful to think about those. Specifically, we're talking about continuity planning today, and if you have an Agreement in Force, then the person that you have the agreement with needs to execute in the event of a triggering event. And that would be the successor's obligation with in force agreement. If there is a triggering event, then they need to fulfill the terms of the agreement. In that agreement as I mentioned earlier, you're going to have the same terms if it needs to be executed that you would have in a sales agreement. So all of the important deal terms in a sales agreement should be elements of a continuity agreement. So you would have things like the tax allocation, particular practice and the attrition, measurement, payment structure in terms, all of those things that you'd find. And an asset purchase agreement should also be defined terms in a continuity agreement. In terms of determining the value based on a continuity agreement, the way that we approach that is we provide a formal practice valuation. We take the dollar result of the valuation, if it's$ 3 million and we convert that result back into multiples of revenue. So you'll have a multiple for recurring revenue and a multiple for transactional revenue, if you happen to have both of those things. And the multiples of revenue are used as a formula of value rather than using the dollar amount, because the dollar amount could become dated quite quickly. And then certainly, you'd want to update that every three years or so, or if there's any substantial changes to the business that would potentially change the value in those multiples. You can see some other items here that are often included in the agreement. But what I'd like to point out as additional benefit to having a continuity partner is that oftentimes those partners support each other, either in terms of staffing, sharing of resources, or just simply helping that one of the parties take time off. One of the things that we've seen is that solo practitioners often have difficulty leaving the practice and taking a longer vacation and so forth. And if you have a continuity partner who can help provide that support, it's just an additional benefit to having that relationship in place. Talking about the communication plan and again, I mentioned that this is generally the least completed step. Certainly, the plan is less useful if only you know it, and I think that's a good way to think about this. So you want to communicate the plan to your clients. We talked about the benefits of doing that in terms of enhancing the growth of the business. And presenting your practice really as a legacy business that will be around, hopefully for generations or have a partnership that will support clients for generations. You definitely want to let your family know that you have a plan and they should probably be one of the key contacts that has access to the documents that you would upload as well. So they know that there's a place to go if something happens, there's key contact people that they should get in touch with, and they won't have to try to navigate that on their own. You definitely want to let your staff know what will happen. And as Tony pointed out, if that step is not taken, oftentimes if the advisor passes away, the first thing the staff is going to do is protect themselves. The way that they'll do that is go out and look for a new job and you don't want that to happen. And most advisors care a lot about the outcome for their staff, and they really want them to be well taken care of by a known person on the other side. Let your key contacts know where those documents are. So that, needs to be part of your communication plan is really having all of that in place. And then periodically check in, see if there's any updates, you might do that on a semi- annual basis. And does the valuation need to be updated? Does the agreement need to be modified? A lot of times they've been sitting in someone's filing cabinet for 20 years and they probably have never been updated. So it's good to do that, periodically. And then lastly, I want to talk about securing the documents. And this is probably another area where people haven't completed the formal agreements, don't follow through to really have a completed plan altogether by taking this step, as well as the communication step. Most of us certainly by now have access to cloud storage. And I think that's a good place to create a secured folder that you share with the key people who would execute the plan on your behalf. And with that in mind, here's some items that you can consider, you want to keep your emergency contacts in that folder. Key business contacts might be contacts at your custodian or broker dealer that you work with on a regular basis. Information on all the members of your team, employee files, that sort of thing would likely be helpful. All of your key vendors, who do you rent or lease the copying machine from, if you lease your office, where is that lease information? Those kind of things that people would definitely need to have access to. You can have tech information, you might have a tech disaster plan that you would put into there. Certainly your continuity plan should be stored there, if you happen to also have a succession plan for your final departure from the business that could be in there as well. And then, any compensation agreements with employees or other advisors, if you're doing any sharing of revenue with advisors that should certainly be in there as well. And I would probably add to this, it's a good place to store your valuations as well, because the valuations are going to ultimately support what went into the continuity agreement. So having this secured storage again, I think it's an out and overlook step, but it could be a really critical step if the triggering event happens and hopefully it never will, but we certainly have seen a number of them. And you really want a few key people to have access to that secured folder with those items. So with that, I'm going to hand it off to Adam at Oak Street Funding. He's going to take you through a couple of slides and then hand it back to Tony, to wrap it up for us. Thank you.

Adam Farag: Thanks Todd, and thanks Tony and everybody participating today on the webinar that we're having here regarding something really important, continuity plans. I think just hearing some of the statistics here of how many people have these things in place or succession plans in place is alarming, right? So thank you guys for joining. My name's Adam Farag, I'm with Oak Street Funding. Oak Street Funding's been around for about 22 years lending to insurance businesses, CPAs and wealth management professionals like yourselves. Conventional loans for acquisition, succession plan fulfillment, or even continuity plan fulfillment or what we're talking about here today. So this first slide that you see here is kind of the rise that we've seen in succession plan loans over the past couple of years, it's growing at a high rate. I think 2017 and before, you looked at a lot of external acquisitions as the main driving force in the space. And while that space is continuing to grow, I think a lot of advisors and I guess, junior advisors at firms are looking to get equity and looking to purchase the firms that they're working in. And it's being used as an alignment tool for employment and for employees that want to grow with firms. So you can see here, it's doubled or more than doubled in the past couple of years. I think that's going to continue to happen. A big topic for debate right now, is the valuations and an external valuation versus an internal and gen two's ability to be able to afford the purchase price, and be able to finance or pay for the purchase price to buy equity into a firm. And some of the stuff we can talk about here today too, is as you go through and evaluate your succession plan or your continuity plan, what does your cap table look like? What's your ownership structure look like? Do you have junior partners that own 5, 10, 15% of your firm, that want to continue to grow that? And we have a product design specifically for that, for them buying in and the firm providing some level of a corporate guarantee that backs the loan in the event, they can't pay. That kind of helps those guys get equity and get on the cap table and grow it. All right, moving along here. So what you'll see here is kind of some succession plan structure. We talked about some of the guys that are sole proprietors or one person owner shops. What does that next step look like for you? We talk about having a continuity plan in place. Are you guys talking to your broker dealers? Are you talking to junior advisors that want to join? And what's your plan? How long do you want it to take before you're out of the business? Do you want it to be a five year process? A three year process? Are you looking to go all the way until the end and then just have a hundred percent buyout? I think you're kind of in the driver's seat. You've got the ability to pick how you want to do it and there's financing out there. That's why we're here today to let you guys know, there's financing out there to offer flexibility for folks that say," hey, I only want to sell 25% of my firm right now." And I want to maybe change up my duties a little bit. And then next year I might want to sell another 25% or you know what, maybe I want to sell 75% right now. And I want to be available X amount of hours per week. The conventional financing that Oak Street provides is flexible. And I think that's the key word here, whether we're talking about succession plans or continuity plans. Getting something down and on paper as Todd and Tony have mentioned previously, is really important. I think Tony said that 18% of advisors have continuity plans or succession plans in place, and that number's got to grow. I mean, for thinking about it, it's one thing. But putting it on paper and having a plan in place for when tragedy can strike, is really crucial for maximizing the enterprise value of your business in the event something like that happens. We'll move past this slide. So with that, I'm going to go ahead and turn it back over to Tony. And then I think we have a Q&A with you guys to answer any questions they got. Thanks.

Tony Whitbeck: Thanks Adam. So we talked about why continuity planning is so important. And we have a turnkey continuity plan that's available to you through our firm and you can do you purchase it right online at advisorlegacy. com. You can see the price is 24, 95 and under services, you just go to continuity planning. And so, what's included in that? What's included is that you get a written continuity agreement by a law firm, so we partnered with a law firm. So it'll be a specific agreement between you and the person who's willing to buy your practice in the event of death or disability. It comes with a professional business valuation. As I mentioned, we do 4- 500 valuations a year. And so, they'll start by doing evaluation on your practice because that's the basis for what we use to determine the metrics that go into the continuity agreement between you and your continuity partner. And typically, that's written as a formula versus a dollar amount. So we'll create a formula based upon the business value that is plugged into the continuity agreement. You also get a 45 minute review of the valuation with our evaluation analysts to go through the valuation, how we determine the value, and what levers you may want to push on to grow the value of your business. And then, you also get an hour of consulting with the law firm regarding the continuity agreement itself. So we'll make sure that it's specific and meets your needs based upon the specific situation that you have. So that's continuity planning and what I'd like to do and now is, open it up to some questions. And we had a few questions that were sent to us in advance. So I'm going to ask those questions first then, I'll take a look at our go- to webinar control panel to see if we have any more. So the first question probably goes to Todd. Todd, this person writes," I'm a sole prop RIA, and would like to know how I can cover a hit by the bus scenario now and yet, not hamstring myself when it comes to time to sell a portion or all of my practice in 10 years."

Todd Doherty: Yeah, that's a great question. And it goes back to what I was discussing when I differentiated between a buy- sell agreement and a continuity plan. I think oftentimes, advisors got themselves into buy- sell agreements when they intended to actually have just a continuity plan. And in some cases, those agreements obligated them to sell to that continuity partner. And we believe it's better to generally leave that option open to how you'll sell, but use a straightforward continuity agreement to protect yourself and your practice in the event of death or disability exclusively. And that's how you would protect yourself without being obligated to sell to a specific party in the future.

Tony Whitbeck: Great. Thank you. Adam, the next one's for you. And the question is," how long should you be preparing to secure financing for your succession plan?"

Adam Farag: Yeah, great question. Thanks, Tony. So every situation's different and I think it depends a little bit about kind of what your succession plan looks like. I think if long term, if it's something that's going to be greater than five years, that involves very small chunks of ownership. I don't think that you need as much time. I know we review deals in 30 to 60 days from start to finish. I think if you have a deal that's a little bit more equity up front, you're talking 50, 60, 70% of the purchase price or the equity being sold right now, and then maybe a little bit shorter term. I would engage us sooner, just to figure out what it's going to look like post close with such a big change of ownership. Maybe get involved three to six months prior to putting something like that together, or honestly, even earlier. And I know you've seen that too, Tony, a lot of times, it's easier if you come to us and say," hey, this is what we think we want to do next year. How do you guys feel about that?" And then, we'll look through the cash flows and look through how much we need to advance. And we might say," hey, that makes sense," and we'll back you on that. And we'll put a loan there or," hey, I don't think we can quite get there and here's why." But here's maybe some things that you can do to change that, to get us there, or here's how much we can get to. So big down payment upfront, get to us as soon as possible. Small 20% or less upfront should be a pretty easy deal for us to handle in short time.

Tony Whitbeck: Awesome. Thanks, Adam. Todd, the next one is for you. I'm not sure I fully understand the question, but it's," how does owning an RIA impact a traditional continuity plan?"

Todd Doherty: Yeah, I'm going to take a guess on that one. So generally speaking, and I could speak specifically to what we do, that the continuity plan would not indicate a stock purchase of the entity. It would indicate an asset purchase of the client's goodwill. And I'm assuming that might be what the question was related to. So the assumption there and the way that we work with both continuity planning and also practice sales is that, the buyer is not buying into or buying exclusively the entity. But they're buying an asset purchase, which, and the asset is the goodwill of the client and the buyer in the case of a continuity plan would likely have their own entity and brand. And so, they wouldn't necessarily want to do that anyway and also take on a liability of purchasing an entity. So hopefully that answers the question.

Tony Whitbeck: Thank you. The next one Adam's for you, it says," do I have to have evaluation before securing transition plan financing?"

Adam Farag: Another good question. What you'll hear me say too, you looked at kind of Tony in the last couple of slides going through what his valuation really includes. And we've used Tony and Todd and Advisor Legacy for valuations for loans. But I've also suggested that folks go and get evaluation prior too, because a lot of times it's a good place to start the conversation. So there's different valuations for different structures. I think if you're getting a 100% of your money on day one, it's worth one thing. Or if you're getting 20% of your money on day one, it could be worth something else. So I think as you're kind of putting your deal together, I feel like evaluation's helpful. As far as a requirement here at Oak Street, we don't do valuations formally, unless a loan is north of$ 3 million. So underneath, it's really more of a cash flow analysis and seeing how the debt would be paid back in the deal structure. But definitely, think it's a good idea to engage Tony and Todd and get a comprehensive valuation from them.

Todd Doherty: Tony, I'd like to add to that one as well. One of the things that evaluation can help you with in advance, and it would take some time to resolve these issues is, if the practice has a lack of profitability, which is part of the valuation analysis that might make the lending more challenging. Then we can address that in advance and hopefully identify ways to improve that. So when you're going to get the funding, the cash flow looks great and everything is in a good position to get fully funded versus, finding out at the last minute that you don't have the cash flow to support it. So that's, why evaluation can be helpful.

Tony Whitbeck: All right, great point guys. Well, it looks like we do not have any questions that are in our go- to webinar control panel. So I'd like to thank Adam and his team with Kara.

Adam Farag: Hey, Tony, I think we have one more that came through. I don't know if it's..." Do practices that change hands through death and disabilities, succession plans, capture lower multiples than practices sold while the founder is a fully capable and willing seller? So I think Todd touched on that. So I'll defer to Todd there.

Todd Doherty: Yeah, I'd be happy to. So I would say there's a range there that you can think about. Certainly having no plan in place is the south end of that range where you could take quite a hit to the actual sale price. And actually, even to the terms of the deal that are determined. Having a good continuity plan in place will definitely get you closer to the upper range of being able to sell in a willing participating succession. And then, if you are actually fully engaged with your continuity partner, if the clients know who those folks are, if all of that has been really well worked out, then I would say you can actually get quite close to a full monetization that you would have in a voluntary succession.

Tony Whitbeck: Great. Thanks Todd. I'm just looking through the chat function. I was looking in the question section, so I apologize. I didn't think we had any, I think that's it. Unless Adam, do you see other questions?

Adam Farag: No, I don't. I think that Todd touched on anything and don't hesitate to reach out to any of us, if you have any further questions.

Tony Whitbeck: So again, Adam and Kira, thanks for getting this set up for us. I appreciate that. And Todd, for your great content, hopefully all the participants today found value in what we presented today. And if you're one of those folks who don't have a continuity plan, stop procrastinating and get one put into place right away. Again, we can help you at advisorlegacy. com and you can purchase our turnkey continuity plan, which provides you with an updated valuation and a legal agreement. So thanks again for coming. Wish you all well, and take care.

Today's Guests

Guest Thumbnail

Anthony Whitbeck

|CEO, Advisor Legacy
Guest Thumbnail

Todd Doherty

|M&A Expert, Advisor Legacy
Guest Thumbnail

Adam Farag

|VP Sales, Oak Street Funding