Advantages of a Certified Exit Planning Advisor

When business owners decide to exit their business, they rarely realize that this once-in-a-lifetime transaction is their most critical financial decision. Any buyer interested in acquiring the business will have top-shelf advisors handling accounting, legal, tax, and transaction details. Owners intend to exit from using a certified exit planning advisor (CEPA) to level the playing field.

Rarely is a business ready for sale when the owner decides to sell. Therefore, most companies need to prepare for the transition, which usually takes more time than anticipated.

In addition, business owners are occupied with running their businesses. They may not find it easy to address all elements of their exit plans, which is why the services of an exit planning advisor are essential. Exit planning advisors help to identify issues affecting the business, which, if left unresolved, may impact the transaction terms and the sale price. Common problems include:

  • Overdependence on the business owner
  • Customer concentration issues
  • Inadequate financial reporting
  • No or little repeat business
  • Middle management issues
  • No or little documentation of business processes/operations
  • No strategic planning for the future.

Although not deal breakers, these issues impact two key areas: the time taken to close the deal and the ultimate value the buyer pays for the business.

The ultimate key is to start early!

Related: An Advisors Role In an Exit Strategy. 

What Is Exit Planning?

Exit planning entails creating a comprehensive strategy to help business owners exit their businesses when and how they want. The exit strategy serves as a roadmap to address all business operations and financial, legal, tax, and value creation issues.

The exit plan focuses on three key objectives:

  1. Maximizing business value before the exit
  2. Helping the business owner be personally and financially prepared for the exit
  3. Planning estate and retirement goals.

Exit planning advisors collaborate with the internal business advisors to assess the business, prepare the exit strategy, and implement these strategies to enhance business value.

To ensure you engage an experienced professional whose knowledge and skills are up to date, hire a certified exit planning advisor (CEPA).

How to Become a CEPA

To become a certified exit planning advisor, one must complete the standard curriculum, show mastery of the required skills and knowledge, and maintain active membership in the Exit Planning Institute (EPI).

The CEPA program is a 5-day, executive-style program. Attendees learn accredited methods for value creation and various assessment tools and gain strategic insights and skills that assist their practice in the exit planning profession.

In addition, EPI offers webinars and virtual training options each month on exit planning and industry-relevant topics to help advisors stay current with trends, tools, knowledge, and industry updates. EPI also offers advanced exit planning courses, each focusing on a specialized skill, such as assessing current business value, helping the business owners identify, refine, and set their exit objectives, and advising on the various exit options.

Once an advisor is certified, they must complete 30 hours of continuing education every two years to keep their credential active.

What Does a CEPA Do?

Exit planning involves several facets of a business: legal, finances, organizational processes, and value creation strategies. The comprehensive nature of existing planning needs years of implementation to achieve the desired results. Although the business owner’s attorneys and accountants are involved in the process, the CEPA visualizes and executes the exit strategy.

A CEPA takes stock of the business and its assets and prepares to facilitate the owner’s exit. They play a critical role in identifying, assessing, and quantifying the owner’s exit objectives and goals. They conduct a complete financial needs analysis to determine what funds should be generated to meet those retirement needs and wants.

To sum up, a CEPA:

  • Helps set exit objectives.
  • Calculates the current business value.
  • Identifies the value gap between the current business value and the targeted future value needed to meet all the owner’s exit objectives.
  • Preserves protect and enhance the business’ value by implementing strategies that streamline business operations.
  • Identifies and removes obstacles that impede building business value.
  • Ensures the owner’s exit objectives and future financial needs are met.
  • Participates in contingency and estate planning.

In short, a CEPA is a specialist who helps clients write and implement their exit strategies.

Who Can Become a CEPA?

Exit planning certification does not discriminate against age, gender, or other demographics. Most CEPAs are advisors who work in related fields and want to expand their scope of practice in the business exit planning and advising world.

Before applying to become a CEPA, the advisor must meet the following requirements:

  • Five years of full-time working experience as a financial advisor, investment banker, CPA, estate planner, insurance advisor, or similar position.
  • An undergraduate degree from an accredited institution. Candidates without a degree must have added two years of related work experience.
  • Active membership in the Exit Planning Institute.

Start Now!

Eventually, you will leave your business. To do so on the best terms possible and to achieve your post-departure goals, take advantage of the skill and knowledge offered by a certified exit planning advisor. Your advisor will develop the exit strategy that best suits you and your company, a strategy that will prove valuable long before you finally exit the business!

For advisors seeking to add to their toolbox of skills and credibility as experts, certification not only helps you develop new skills and testifies to your professional competence but also helps you expand your clientele.

Value Scout works with certified exit planning advisors. Get in touch today to know more.

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Author Summary:
Dan Doran

Dan Doran

Is the Founder of Value Scout, Quantive and the 2019 Exit Planner of the Year. He is a recognized expert and speaks frequently about M&A, valuations, and developing more deliberate value creation strategies.

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