Three Realities of the Coronavirus Pandemic and Why They Matter for the Future of Your Firm
The coronavirus pandemic turned the world upside down and took with it the longest-running bull market in history. Whether you have early aspirations of selling your business or are in the middle of a merger, this event may have you second-guessing yourself.
Make no mistake, our business environment is different now. Nearly all in-person meetings have ceased, conferences have been postponed or canceled, and our homes have become our offices. Nonetheless, that doesn’t mean your long-term business goals should fall by the wayside.
We’re in continual contact with founders and principals of wealth management firms from across the country that are mapping out their plans for succession. We’ve heard overwhelmingly in recent months that these firms want to move forward, which is good news for our industry as a whole. However, there are still a large percentage of owners who lack formal strategies for their exit.
If you’re unsure about your next move, consider these realities of the coronavirus pandemic and how they might affect the future of your firm:
- This isn’t the first crisis, and it won’t be the last. If we learned anything from this pandemic, it’s to prepare for the unexpected. There’s no telling how much worse the current situation will get and how long it will last. Don’t let these uncertainties stop you from making your next move as a business owner.
- Short-term emergency plans won’t replace your long-term exit plan. It’s critical to have emergency response plans in place to ensure business continuity. However, those plans are typically designed to solve a short-term problem. A long-term succession plan ensures the preservation of your firm’s legacy for years to come while providing continuity and security for your clients and employees and should not be ignored. If properly anticipated and structured, it can also help a firm founder optimize the value of their business while ensuring that their business lives on long after their own retirement.
- Wealth management firms have staying power and will come out the other side of this crisis. We’ve seen good firms grow exponentially in down markets. Financial firms are profitable businesses as long as they continue to retain existing clients and attract new ones. Stay focused on client relationships and drive current growth as you contemplate your future succession strategy.
Though deal structure may have changed slightly, valuations have not, and with taxes at an all-time low and valuations at an all-time high, this might be the time to think through your strategy and plan ahead. When you’re ready, we’re here to help plan for your next steps as a business owner.
To learn more about what succession looks like in today’s market, take a look at my conversation with Financial Advisor IQ.