There’s nothing quite like it. This raises the question: “Do I need a succession planning consultant, or should I sell my company on my own?” And here, the picture becomes clear. What’s surprising is that this decision is made without knowing which tasks must be handled by a consultant—or, in the case of a self-managed sale, by the owner themselves.
Let’s now turn to the main topic: succession planning advisor—yes or no? As you might expect, there are two camps here: those for and those against using a succession planning advisor. The “against” camp puts forward one main argument: “I don’t want to pay a commission.” The main argument of the “pro” camp, on the other hand, is: “I lack the experience.” After all, you don’t sell your company every day. Although both groups of entrepreneurs are pursuing the same goal—the sale of their company—each group takes on different risks, which in most cases stem from a lack of knowledge and are therefore avoidable. No other business process involves so many different factors and stakeholders (sellers, buyers, tax advisors, bankers, customers, suppliers, etc.).
Furthermore, there’s a common misconception that buyers purchase a company for purely rational reasons. The fact is: The decision to buy a company is 90% gut-driven. Money plays a secondary role. Either the buyer has the money or they don’t—it’s that simple. By purchasing a company, a potential buyer fulfills a dream that is driven by purely emotional motives, which they then justify rationally.
What distinguishes a reputable succession advisor from an unprofessional one? What are the distinguishing features between a reputable and an untrustworthy succession advisor? Distinguishing between untrustworthy and reputable advisors is important because doing so will save you not only time but also a lot of trouble and money.
The unscrupulous succession advisor—or con artist, swindler, and con man!
You can recognize an unprofessional succession advisor by the following modus operandi: You receive a (mass-mailed) letter in which the sender claims to have a prospective buyer for your company. The advisor/consultant pressures you to sign a contract as early as the first visit. The contract obligates you to make flat-rate monthly payments. The contract contains no precise description of the services for which the payments are to be made. The advisor is rarely able to correctly interpret a balance sheet. During the closing phase, the consultant persistently holds a pen under your nose and pressures you to sign the contract. Objections, if addressed at all, are barely acknowledged. The success rate, measured by the number of companies served, is less than 3%!
Tip: If necessary, ask for verifiable references. In summary: The goal of this type of succession planning consultant is to get your signature on a service contract that obligates you to pay monthly fees. Selling your company is secondary.
Tip: If a consultant pressures you to sign a contract during the first visit, show them the door.
The Reputable Succession Planning Consultant
A reputable succession planning consultant is characterized by a transparent and informative approach. You can recognize this by the fact that, during the initial consultation, the advisor gains a comprehensive understanding of the company being sold and its owner. This includes, for example, the following points: As a first step, the advisor will assess the company’s marketability based on key financial metrics and an evaluation of its future potential. The advisor identifies potential risks and brings them to the owner’s attention! The advisor specifies the fee they will charge in the event of a successful sale and provides a sample contract for review. Only once these points have been clarified does it make sense for a reputable succession planning advisor to enter into a partnership.
