Elements for Building an Ironclad Advisory Team
In the pantheon of high-stakes life events, exiting your business ranks near the top. Your exit is the culmination of years of sweat and sacrifice that made your business what it is today. Stepping away is a major milestone, and the outcome—positive or negative—has lasting impact. This post-exit impact is commonly referred to as your legacy.
Trelus has spent years studying the best practices of owners who achieve their best exit and preserve their legacy. This is the first in a series of posts where I’ll share what we’ve learned so you can benefit from the lessons learned by those who’ve done this before.
Lesson 1: Build an Ironclad Advisory Team
The first thing we learned is that owners who exit well don’t go it alone. They start building a team of trusted advisers years ahead of their exit. You have a lot on the line when you sell your business, and this advisory team can be the difference between a great exit or a deeply disappointing one.
To give you an idea of the scale of mistakes you might make without proper advice: we once met an owner who made a misstep in selling his $30,000,000 business that cost him $10,000,000. That’s a third of his total business value! Had he built the right team of advisers, this costly error could have been avoided.
So find individuals you trust and start assembling your squad before you so much as take one step toward the exit door. In general, owners who exit well start this process, at least two to five years prior to their exit goal.
4 Types of Advisors and Why You Need Them
What should your team look like? We identified four different types of advisors that make up a well-rounded group. Like players on a sports team, each type plays a unique and indispensable role.
- The Subject Matter Expert: These advisors bring a depth of knowledge and experience in specific areas of expertise. Areas of expertise include tax, legal, financial planning, succession planning, M&A, and other possible factors relevant to selling a business in your industry.Why you need them: These experts have the information, tools, and resources to help you make better decisions and see faster progress. They can also guard against mistakes that you might make if you handle things on your own.
- The Coach, Mentor and/or Partner: These advisors may not have specific experience with exiting a business, but they know you well enough to be a mirror and sounding board.Why you need them: They won’t hesitate to be radically candid and challenge your thinking if they sense broken logic or see you taking a path inconsistent with your values.
- The Owner (i.e. you): Who, me? I’m an advisor? The reality is, we advise ourselves all the time. In fact, you should consider yourself the quarterback of the advisory team.But proceed with caution to avoid cognitive bias and self-deception. Nobel Prize winning physicist Richard Feynman said it best: “you must not fool yourself—and you are the easiest person to fool.”If Richard Feynman was worried about cognitive bias, us “mental mortals” should be, too. The good news is, there are tools and methods to defend against cognitive bias. One of those methods is having, and listening to, advisors you can trust.
- The Peer Guide: These are peers (fellow owners) who have already been down the road of exiting a business.Why you need them: Their perspective acts as a shortcut to uncovering best practices, identifying mistakes to avoid, and spotting emotional pitfalls.
In my next post in this series, I’ll share how successful owners can know which advisors to trust and when to bring them on board.
Need a Hand? Trelus Can Help.
At Trelus, we built our Exit Navigation Platform based on the principles and best practices of owners who planned well and were happy with their exit experience. Our platform can help you ask the right questions, maximize value and make tangible progress toward your goal. Create your free account here to start your journey.