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Business owners work with a variety of advisors, consultants, and coaches in their business development and exit planning processes. The CPA is considered by many business owners as their most trusted advisor. Given this and given how integrated they typically are with the business owner and their company, CPAs are put in an advantageous position to provide owners with the guidance and support needed to successfully transition their company. It is likely that the business owner will turn to the CPA for guidance, allowing the overall accounting firm to open a new service line in exit planning. A potential significant return for the firm, leading them to deepen their relationship with clients and their companies.

The $50 Million Opportunity

Exit Planning provides CPAs with roughly a $50 Million opportunity for growth. According to national statistics, 60% of your corporate or owner clients are Baby Boomers. As our State of Owner Readiness Survey shows, 50% of Baby Boomer owners are looking to exit in the next 1-5 years. Through research done by our Owner Engagement Members, we discovered that 10% of these owners have already started exit planning and 30% will never do anything at all. This leaves 60% that are interested in exit planning and have yet to begin the process. Of that 60%, half of these owners are “ready now” and will actively do something with you if you approached them in the right way. Of those companies, 20% are lower middle-market companies, making between $5 million and $100 million in revenue.

Look at it this way:

Say the accounting firm had 2,000 business owner clients 60% are Baby Boomers – 1200 clients 50% are looking to exit in 1-5 years – 600 clients Middle 60% are interested in exit planning – 360 clients 50% are ready to exit now – 180 clients 20% of those owners are lower middle market companies ($5 million – $100 million in revenue) – 36 clients

Out of your 2,000 business owner clients, 36 provide an opportunity for around $30 million. The average company sells for $8 million. Multiservice accounting firms have multiple opportunities with this $8 million company.

The following fees are likely while working with the $8 million sale:

Accounting – $40,000
Financial Services – $80,000
M&A – $500,000
Exit Planning – $140,000
Total = $760,000
$760,000 x 36 clients = $27 million

The larger your total client base, the larger the financial opportunity exit planning provides. Say you have 5,000 owner clients; if you follow this math you will have a $54 million revenue stream from conducting exit planning with just 72 of those clients.

CPA: The Most Trusted Advisor

As a client’s most trusted advisor, a CPA has valuable insight into their business practices and financial needs. According to Scott Snider, “Given the CPA is the most trusted advisor it is likely that the owner will turn to you, if they have not already, and ask the question, ‘I’d like to sell my company can you help me?’ Question for the CPA is: can you? Are you going to be prepared with the process, the tools and resources, and the right team to make that a massive success for your existing client? I would challenge you today and say you are likely ill prepared for this question”. To gain significant knowledge about the exit planning process and how it impacts business owners, CPAs should invest in themselves and obtain the CEPA designation.

Scott Snider says, “A CEPA credential holder has been trained inside of the Value Acceleration Methodology. It allows an advisor to move from transactional work and conversations to more holistic solution-based and consultative conversations. We turn an exit conversation into a business strategy conversation including a deeper personal connection. This allows the advisor to look at an owner and their company more holistically. How ready is the company? How personally prepared is the owner? What does the owner’s personal financial plan look like? By approaching the owner this way, we connect much better and deeper to the owner and potentially the owner’s leadership team and family. This allows the CPA to develop a much more entangled relationship”.

A CPA with a CEPA designation gains more than an additional four letters after their name in an email signature. The Value Acceleration Methodology is a proven process to help an owner rapidly build value and sell at a premium. This means the firm gains revenue opportunities across the board. In helping your client’s get the most out of their exit plan you will build a strong relationship with them as well as the future owner of the company. Scott says, “You secure that relationship for generations to come because you invested in them through utilize the CEPA process”.

Learn how to expand your business, build lasting client relationships, and open yourself up to a $50 million opportunity by attending our CEPA Masterclass and our Accounting Firm Webinar Series.

Are All of These Advisors Exit Planners?

As the need for exit planning becomes more prevalent to business owners, the need for high caliber advisors rises as well. Over the past three years, the exit planning marketplace has experienced growth and change as it responds to the business owner’s needs. Those needs, in part, call for advisors to reinvent themselves into something more: The advisor of the future. A holistic business advisor. Not an accountant, not a wealth manager, not an investment banker or attorney. But more than that. A true and trusted advisor that an owner can turn to for high-quality business advice.

Advice that could be around a new product they are launching, an investment in real estate, how to rapidly grow value in their business, an employee development program or how to align their financial plan with their personal goals in life over the next 20 years. The advisor of the future has the competences to address all types of questions directly with their own expertise or indirectly through an expert on their collaborative team. As we see advisors transform themselves by becoming Certified Exit Planning Advisors, we see them embrace their training and new knowledge in three major ways.

The first group of CEPAs calls themselves the “Owner Engagers and Collaborators.”  These advisors utilize their training and knowledge to have deeper and more holistic conversations with business owners around actively planning for their exit by utilizing value acceleration as a business strategy. These advisors are becoming more entangled with their clients’ lives. Learning more about their client’s company, their personal/financial strategy and what other passions they have in life outside of their business. By doing this, they uncover owners’ needs and with a collaborative team can recommend the right advisor to work with, typically a fellow CEPA.

The next group is the “Triggering Eventers”. These advisors are certainly utilizing their education to better engage owners and run collaborative teams, but they are going a step further and are primarily conducting the Triggering Event Engagement. This engagement is a combination of a strategic range of value valuation correlated to an enterprise value assessment. An assessment of the intangible factors in both business, financial and personal aspects of the owner and their company. Once that engagement is done, they are typically handing off the management of the engagement to a fellow CEPAs, a Value Advisor.

The last group, the “Value Advisors,” go the full length and manage the entire process for the clients. They conduct Triggering Events, they manage the clients exit strategy through the Prepare Gate in the methodology (and charge a monthly retainer to do so) and when ready, will help the client choose an exit path and begin to execute that path through their collaborative network of investment bankers, private equity groups, ESOP advisors or any other option they may choose

There are two things that all three types of these advisors have in common:

• First, they are all CEPAs. Trained in the same methodology, believing in the same organizing principles and all going after a common goal.
• Secondly, they are all venturing towards becoming a business advisor by having a collaborative network that can serve the owner in various ways and, more importantly, by becoming an educator. Someone who educates the owner before, during and after their exit.

However, the challenging question to navigate in the marketplace from some is, are all three types of CEPAs exit planners? Some believe the answer is no. But it depends on your definition of an exit planner. For the naysayers, they define an exit planner by the traditional early definition. An exit planner is an advisor conducting exit planning work, being paid to do so, the traditional quarterback of the team executing a plan for exit. But if you look at what the market needs today, and what the business owner wants, an exit planner needs to be much more than that.

EPI defines exit planners as holistic business advisors. Someone who can educate owners on the process of exit planning. A person who can align the business, personal and financial goals of the owners. An advisor who can also align the owner, their teams and their family.  An advisor who may do the exit planning work directly and get paid to do so or may not. And if they do not do the planning themselves, they have a robust, trusted and collaborative network of advisors that can be introduced to the owner.

In 2018, baby boomer business owners are reaching their mid-70s and we will begin to see the greatest wealth transfer in the history of the world. These owners will experience in their business and personal lives they have never navigated before. They will need business advisors. They will need CEPAs.