The Role of the Wealth Manager in the M&A Team

Posted by George Walden on September 16, 2013

Walden-Blog-Chart-300x169Selling your business is a life changing experience. The business owner will shift from their net worth being tied up in their Company, to their net worth being cash. The business owner is making the transition from a business making them money to their money making them money.

Mergers and acquisitions is a team sport. In addition to the investment banker, deal attorney, and tax CPA, the wealth manager has a vital role in the process.

As we start the transformation of helping someone to exit their business, we have some very important questions to answer, to fully understand the goals of the business owner.

What’s your number?

One of the fundamentally important roles of the wealth manager is in helping the entrepreneur to determine how much money it takes to accomplish their goals. How much does it take to feel secure? The cash flow that the business generated has been funding a lifestyle that must now be replaced by other streams of cash flow. The business owner now has the chance to ensure the financial stability of their children or grandchildren. The owner has the opportunity to fund charitable enterprises.

All of this takes money. It is important for the entrepreneur, as well as the M&A team to comprehend how much their goals will cost so everyone understands how much capital they will need out of a transaction to fund these goals.


When the wealth manager is brought into the deal from the beginning, there are often recommendations they can make regarding the legal structure of the business owners assets that can impact taxes and gifts. Each family is unique and each situation is different, but the wealth manager can help answer a few of the following questions:

  • Are there gifts to children or grandchildren?
  • Is it more efficient to gift stock in the company pre-sale or cash post-sale?
  • Is there a need for trusts or foundations to be set up prior to a transaction?

When these questions are contemplated before a transaction, it can have a significant impact on how much wealth the family keeps and how much it pays in taxes.


During the process of taking a company to market, the ultimate goal is to have multiple bids on the company. Each of these offers can vary widely in structure and form. We, as investment bankers, ensure the entrepreneur understands what the offers mean to them and work hard to effectively compare offers side by side.

There are many ways to get paid for your company. In addition to the sales price of your company, there are employment agreements, non-compete agreements, consulting contracts, earn outs, seller notes, just to name a few. This not only impacts how much you get paid, but when you get paid as well.

During the negotiation process, it is important to have a wealth manager that is able to measure the impact of these changes and ensure the offers under consideration still accomplish the entrepreneur’s goals.

Putting Money to Work

Exiting your company will likely be one of the largest financial transactions of a business owner’s life. Significant thought needs to enter into what and where that money gets invested, in order to accomplish a set goal. Working with a wealth manager that listens and structures their assets uniquely for the needs of the entrepreneur’s individual situation is imperative. This is not the time for a good salesman….rather it is time for a serious, thoughtful, long term plan for the business person that includes flexibility as life and the economy changes.

How and where to put the proceeds of a sale to work is not a decision that should be made post-closing. The plan needs to be in place and that money needs to go to work immediately. Making these decisions up front brings about a more deliberate decision. It also takes this issue off the table so the business owner can focus on the sales transaction itself.


Utilizing a wealth manager as part of our M&A team on the front end can shorten the sales time, help the business owner stay focused, and result in an increase in the probability of success.

The wealth manager is not a role typically considered when forming an M&A team. We bring them into the process very early and find them to be an integral part of our ability to maximize the outcome of the sale of a business for families.

Forward Results September Band Jam Tuesday

Posted by Matt Register on September 8, 2012

If you have not been to the Forward Results website yet, you need to. Forward results has a monthly band jam networking night that involved food, beer, wine, live music, and great networking. This event is open to business owners and professionals who work with business owners. More information below. Don’t miss it this Tuesday!

CLICK HERE for more information!

Forward Results Band Jam

The Value of Your Bench

Posted by Matt Register on September 3, 2012

One of the organizations that we are affiliated with that does exit and succession planning is Forward Results. They had a lunch and learn the other day that was on Human Resources. The ability to have a bench that allows you to exit your company has a value to the buyer. It is a way of removing risk for the buyer in a transaction. Below is a video of the presentation. If you are contemplating an exit, it is worth a look. If you would like to attend a future presentation, here is a list of the upcoming presentations.

Is It Time to Sell Your Business?

Posted by Matt Register on July 27, 2012

Barry Moltz had a great article at the American Express Open Forum about when to exit and how to prepare for an exit. You can read the original article HERE.

“Quitters never win and winners never quit.” —Vince Lombardi

In small business, it’s not that winners never quit. Rather, winners know when and how to get out at the right time. Making a change is always tougher than the status quo. Most owners hang on too long and delay a decision when their businesses are either wildly successful or just plain not profitable any longer.

A fading business. When a business is fading, owners often keep waiting for that the next prospect, the next big customer or a new employee who will make the difference and finally propel the business out of its financial mess. They believe that they can grow their way out of whatever financial difficulty the business faces. It rarely happens this way. Most of the time, they spend too much time going down the same path, doing the same thing over and over and hoping for a different outcome (per Einstein’s definition of insanity). Many times, the business barely breaks even and gives the owner only a minimal amount of money to survive. Eventually, too much debt piles up until a lack of cash crushes the business. While hope is an important component of the entrepreneurial spirit, it alone is not a marketing or sales strategy.

A poorly performing business. If the business is doing poorly, it may be time to shut the doors. The key indicator is the level and rate of the debt. Watch the cash flow statements to see if the business continues to fall deeper into debt on a monthly basis. If the business is borrowing money constantly from any available source just to fund company losses, it’s time to shut the doors. In most businesses, when the current liabilities become more than 200 percent of current assets, it is too difficult to recover. Finally, if the business is keeping the owner up every night thinking about their financial risk, it’s time to move on and start again.

A profitable business. If the business is still growing profitably, maybe it’s time to sell. The key indicator is to look at the business owner’s passion. Does the flame still burn inside? If their passion is lost, and they no longer like working at the company, it’s time to sell. The second step is to ask “What will the owner do the day after the business is sold?” The answer will determine readiness as well.

To maximize a business’s sale value, here are five things that buyers look for in any business:

  1. Consistently upward profit and sales trends. Buyers love a revenue line that is going up and to the right for at least three years. Understand where a business is in the growth lifecycle and sell towards the end of it.
  2. Large gross profit margins. Over time, margins have a tendency to shrink for companies as competitors enter the marketplace. Sell when the margins are still fat and before they begin to erode.
  3. Long-term customer annuities. Has the business had the same customers over a long period of time that reliably uses the product or services? Do they pay the business a monthly fee billed to a credit card? Is 80 percent of the business spread over at least 10 customers? All these items attract buyers that are willing to pay high prices.
  4. Financial statements that match tax returns. If these statements are not accurate, owners must do more homework before the business is sold.
  5. No surprises. Buyers hate this in the due diligence process. Any skeletons in the closet? Any “off the financial statement” accounting going on?
  6. When a successful entrepreneur has a profitable business, too many times they want to roll the dice to build it bigger. Greed gets in the way. They see this as their one chance to get rich. Ask yourself, are you ready to double down or cash out your gains? Set a firm deadline by which you make a decision and do not allow “overtime.”

International Gathering of Dealmakers

Posted by Matt Register on July 26, 2012

Corporate Finance Associates is a middle market investment bank with offices in 14 countries. We get together as a company twice a year. The exit of entrepreneurs is a big topic of discussion at the meeting. The leading edge of the baby boom tsunami of entrepreneurs looking to exit their company has hit.

CFA Meeting

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