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  • Writer's picture Peter Flippen

Early Financial Planning Can Sweeten a Sale

Noah Greenbaum is a partner in Canal Capital Management, which he co-founded in 2011. The firm has over $500 million in assets under management. As a holistic, full-service wealth management firm, they specialize in consulting and assisting business owners with financial planning, taxes and investments. He offers this advice to HVACR business owners on how to choose and get the most from your financial planner.

What should business owners know about financial advisory firms before they sign on?

Greenbaum: It’s important to find out what their incentives are. How are they getting paid for the relationship, and are any products or commissions attached to their advice? Also, determine what their expertise is across the whole client experience. Are they generalists, or do they have experts in each area? Our team at Canal is structured as the latter, so we’ve got CPAs, CFPs and MBAs who specialize in tax planning and investment planning, personal and business financial consulting, and we match them to the client’s needs.

Is there anything HVACR owners should be particularly aware of in choosing a financial planning firm?

Greenbaum: Any business owner, including HVACR firm owners, needs to approach financial planning with eyes wide open. You need to be as detail-oriented about handling your personal assets as you are about your day-to-day business operations.

What steps would you advise an owner preparing to sell his or her business in the next five years to take in preparation for the sale?

Greenbaum: A number of people come to us saying, “I’m not ready to sell just yet, so I’ll come talk to you once I’ve sold.” Typically, that’s too late. Just as you’d engage someone like IEI Advisors in the process of selling your business, you should be working with a financial adviser at the same time and not simply after the fact.

We can suggest a number of things you can do before the sale to help enable you as the owner, your family and potentially the employees have more in their pockets after the sale goes through.

What are some of those things?

Greenbaum: From a tax planning standpoint, you can set up different vehicles to receive the funds upon the sale. Depending on the size of the business, you should figure out if a larger strategy should be in play, where you gift proceeds to family members or employees to avoid potential estate tax issues. Or, you might have charitable interests you want to fund.

The main thing is to start considering these things early in the process and get the whole family involved. Determine what your ultimate objective is. Once you know your goal — let’s say it’s retirement — the sales process becomes a lot easier because you’ll be able to tell if the sale gets you there. If not, you can then explore if there’s more value still to be created to increase the ultimate sale price so you will be able to retire.

Could you walk us through the main steps you take to guide a client through the sale of a business when the time comes?

Greenbaum: It’s an iterative process, often requiring several meetings to figure out the owner’s post-sale goals and objectives. Then we work backwards from there to figure out how to best meet those objectives. When we’re brought in on the front end, we can set a number of the pieces in place early.

But we’re not working on this alone. We’ll collaborate with attorneys and M&A advisors like IEI to get updates on where they are in the sales process until an LOI or purchase agreement is actually signed. Then we get down to executing the business owner’s plan.

After the sale goes through, what’s the relationship between the former business owner and your firm?

Greenbaum: We tell clients that they’ve sold one business and gone into a new one — the asset management business. Now they’re managing their personal financial lives, which is why they hired us. We essentially act as their personal CFO, just as they had a CFO for their HVACR business.

One last thing to note: With potentially higher taxes coming, we’re getting a number of questions now from clients about what they should do to prepare. Again, that gets back to where we can add value and where planning really needs to be in place.

We tell people it’s what you keep that counts. There’s never one silver bullet that corrects all issues. But if we can do a number of different things around the edges, we can save you real dollars.


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