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To Win at the Game of Succession Planning, You Need a Good Coach

Nov 13, 2020 08:39AM ● By Med Magazine

You may have spent decades building your private practice or another business and banking on a comfy retirement on the proceeds from an eventual sale. But without a succession plan in place, one unforeseen event could quickly derail those plans. 

"It is a balancing act," says Gary Popkes of Frontier Bank. "You want to sell your business when it has maximum value. Not too early, but not too late. The more you can plan and set up ahead of time, the more time you have to analyze a number of scenarios."

As a Certified Financial Planner and Wealth Advisor with nearly 30 years experience, Popkes helps his clients run through those scenarios and come up with succession plans that work for their lives and their businesses. 

"There is no cookie cutter approach. Every situation is unique," says Popkes. "Some people want to be able to retire completely. Others would rather set up a structure where they can pass on the business, but they still want to continue to work there and add value to the business as long as they are able." 

The best way to ensure that things play out the way you want them to, says Popkes, is to be proactive. That starts with knowing your own vision. 

If your business is a family-owned business, do you want to keep it in the family? If not, are there employees capable of buying you out and taking over? Will you finance the buy-out yourself? In the case of a medical practice, do you want to sell to a larger healthcare system, or ensure that the practice stays independent? Other critical considerations are your health and your age. 

"What you don't want is to end up in the hospital and be forced to sell your business quickly," says Popkes. "That is the kind of situation that attracts vultures. If your business was worth $500,000 when you went into the hospital, after two months, someone might offer you $250,000."

To guard against this kind of scenario, Popkes recommends working with a professional advisor to develop a succession plan. The advisor should be willing to sign a nondisclosure agreement to ensure that no one will hear about your plans to sell before you are ready.   

"That is a valid concern for a small business owner, especially if there is an underlying health issue," says Popkes. "It can be a difficult thing to talk about. The client needs to know that everything is completely confidential." 

The process of developing a succession plan can take several years and will inevitably involve a number of professionals. There may be a business broker, an attorney to write the contract, a tax attorney, a CPA, a life insurance agent, and others. Popkes says the role of a good advisor is to act as a sort of "coach", bringing the parties together as needed and ensuring that the process keeps moving forward. 

"Sometimes it's challenging," says Popkes. "You talk to the tax attorney, then you hang up and talk to the attorney, then you talk to the CPA. It can be overwhelming. We can help bring them together to make sure that nothing falls through the cracks." 

"Our goal is to walk alongside our clients and get them across the finish line. That's what a good coach does." 

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