A little-used strategy that could add tens of millions to your AUM

Sell your business Rob Follows
Rob Follows Sell their business
Rob Follows: By positioning one of our clients with international strategic buyers, the sales price went from $40 million to $400 million.

When your clients sell their business, are you frustrated that you don’t always add the resulting windfall to your AUM? There’s a simple way to insert yourself in the sales process, add more value to your clients, and ensure you get your fair share of the proceeds to manage.

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One of the objectives of my podcast is to help advisors figure out ways to add more value to their client relationships that goes beyond money management.

Today, we’ll discuss how you can add tremendous value to your clients by helping them get top dollar when they sell their business  by selling to strategic investors.

My guest is Rob Follows, Founding Chairman and CEO of STS Capital Partners.

Rob is one of the world’s leading mergers and acquisitions experts and his firm specializes in helping mid-market private businesses get maximum value for their companies by selling their business to a strategic–as opposed to financial–buyer.

If you have clients who own a successful private business, you’ll want to listen to this podcast and read the show notes below.

Listen to Rob Follows on Selling Your Business

Here are a few edited highlights from my discussion with STS Capital Partners Founding Chairman and CEO Rob Follows.

 Download the full transcript for deeper learning and gain access to dozens more. 

1. Your business owner clients can make a lot more money selling to a strategic investor rather than a financial investor.

Financial investors are normally labeled as ‘Private equity’ or ‘Merchant banks’ or ‘Venture capitalists.’ Their job is to buy companies for the lowest possible price, turn them around, then sell them in a few years to a strategic investor for a much higher price. By contrast, strategic investor is defined simply as ‘who is going to make more money owning your business than you will.’ As an advisor, when your client is ready to sell their business, you can refer your business owner clients to a firm like STS Capital who focuses on selling companies directly to strategic investors for prices much higher than financial investors would ever pay.

2.  The “6 D’s” are the most common reasons why a business owner sells their company.

As an advisor, keep your eyes open for these “6 D’s” because when you see one coming, you can be proactive and initiate a conversation with your client about protecting and maximizing the value of their business. The “6 D’s” are: death, disease, divorce, disability, disintermediation, and disenchantment. You can also add too much debt to list.

Every Family's Business3. A simple way to add value to your business owner clients is to give them a copy of the book, Every Family’s Business by Tom Deans.

When your business owner client is ready to sell their business or just starting to think about it, you can give them a free copy of Every Family’s Business compliments of STS Capital Partners. This is a great way to insert yourself into the sales process in a conflict-free way. The book is a good primer for private business owners who are considering selling their company.

Get Free Copy of Book
Click here to get a free copy of Every Family’s Business.

4. You can help your business owner clients take actions now that will raise the value of their business.

Just as an advisor knows there are actions they can take today to raise the value of their business in preparation for a future sale, your business owner clients can do the same. For example, if your client is within a few years of selling, you can setup a call today with STS Capital for a preliminary discussion about ways your client can enhance the value of their company. As the advisor, you could be on the call, too. This ‘Preparing to sell to strategics’ conversation is important because your client will learn the critical success factors that strategic investors look for.

5. When you sense the time may be right for your client to sell their business, you can ask them this question.

As an unbiased confidant, you’re in a position to raise this question with your business owner clients, ‘Would selling your business at some point help you on your path from success to significance?’ Most likely it’s already on their mind and you can take the next step by explaining how you may be able to help them maximize their sale price by selling to a strategic investor.

Tools From STS Capital Partners

  1. Download this customizable handout that you can give to your business owner clients.
  2. Download this two-page information sheet which contains some qualifying questions to go through with your client before engaging STS Capital Partners.

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Steve is the founder of Belay Advisor and a NYT bestselling author, podcast host, speaker, and financial advisor coach.

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