Business Valuation:  It Begins with the Value of Strategic Advice

Like people, businesses who survive the test of time, thrive over numerous lifecycles, dodging obstacles like economic and tax changes. Tax and financial advisors are important professional partners in the journey.  This is especially true when business owners become so consumed with the day-to-day aspects of running their business that they spend less and less time working on the investment in the business itself.  The advisory role is to help business leaders take a broader view of the company and in process, to shore up business value for an exit down the line.

Excerpted from the Knowledge Bureau’s Certificate Course Understanding Business Valuation

Risk management, specifically identifying and protecting the “downside”,  is a big part of this and doing it well can often be a function of experience.  With so many businesses transitioning to a new guard as boomers retire, advisors could provide especially valuable assistance in this important area, since they might have had similar experiences with other clients, as well as the fact that their point of view is more objective.

When a company is not performing well, or is experiencing diminished financial performance, there may be first time issues to deal with.  Lenders or the owners themselves might find themselves in a situation where regular repayment of the capital that was advanced to the business is in jeopardy.  Depending on the circumstances, the company might be unable to pay at all, or might simply need some extra time or relaxed terms in order to repay their obligation. Owners may need help navigating those new challenges to a successful conclusion.

This often means understanding what to do to improve financial results.  Many business owners do not have a formal background in business or finance.  Once a company’s financial performance begins to unravel, such a business leader might not fully appreciate what is occurring and when to get started to improve the situation.  Often that start to pull back spending reins, in the absence of improved revenues, happens too late. 

Advisors knowledgeable in this area can provide the right plan, skillset, and experience to understand the problem and identify the most critical issues, resulting in the situation being corrected before it gets out of hand.  The value of this type of assistance cannot be reinforced enough; it is, in fact, invaluable.     

Advisors could also be a valuable resource to business leaders with their access to a network of professional advisors – specialists who can come in and perform a due diligence exercise that presents a true value of the enterprise, in case an option is to sell when the upside is again in sight.  This network could include the advisors who can help to resolve the problems within the business and turn the situation around, as well as potential financial partners. 

Real Wealth Managers are trained to provide a strategic multi-advisory service in situations like this. The need for a comprehensive approach to address client’s needs is not new.  It has been known for years as a Family Office model for ultra high net worth clients. It has been estimated that 68 percent of the Family Offices were founded in 2000 or later. Credit Suisse estimated that there may over 10,500 family offices globally.

As client’s wealth increases so does their need for a multi-faceted approach to managing their affairs. So while traditionally this type of services has been offered to ultra high net worth families, families with increasing value in their financial, business and real estate assets in Canada require a similar multi-advisory approach to their wealth management solutions.

Real Wealth Management™  features the democratization of the Family Office model; and it is a service you can provide to the families with emerging  wealth that you currently service.

Real Wealth Management™  is also a framework for practice management and education  that features a multi-stakeholder, multi-generational approach to the accumulation, growth, preservation and transition of family wealth, pioneered by Knowledge Bureau, with a focus on the key wealth eroders:  taxes, inflation and fees.

Bottom Line:  The value of strategic advice is critical to bringing value to your clients investments and financial peace of mind.