How Business Valuation is Opening Doors for Financial Advisors

Steve Mize, October 16, 2020

Investment management is becoming commoditized with technology, digital players, and discounters pushing investment costs to zero. To stay relevant and also to stay competitive, Financial Advisors need to enhance their arsenal of services to justify charging fees to their clients, but those services have to provide valuable tools and information.

Consider business owners as a great place to start. Business owners, especially those business owners who are owner/operators, can be difficult to get to the table. Business owners, however typically have one thing in common; most do not know what their business is worth. It's safe to say that a business owner's most valuable asset is the business itself - this offers an opportunity for financial advisors.

The easiest way to jumpstart that conversation with a business owner client is by asking one simple question…"Do you know what your business is worth"? There are multiple life and corporate events that business owners will encounter during their lifetime of business ownership, many of which will require a Business Valuation.

Those situations include:

  • Estate Planning
  • Gifting
  • Key Man Insurance
  • Defined Benefit Plans
  • ESOPs, Divorce
  • Mergers & Acquisitions
  • and Partner Buyouts

As business owners increase in age, they have the majority of their wealth tied up in their business and need guidance on exit strategies. The 12-year bull market is slowing and financial advisors are turning to business valuation as a new service to their business owner clients, which gives them an additional revenue stream and the attention of business owner clients.

The next time you meet with a business owner client, your very first question should be - Do you know what your business is worth"?