is there a demographic time bomb in your client base?
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Business Valuation Value Gap Analysis Succession Planning for your Clients. Is there a demographic time bomb in your client base?. Agenda. How do I value my business? What is my value gap? How do baby boomer clients affect my business value, profit and succession?. - PowerPoint PPT PresentationTRANSCRIPT
© Bstar Pty Ltd 2007
Is there a demographic time bomb in your client base?
Business Valuation
Value Gap Analysis
Succession Planning for
your Clients
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1. How do I value my business?
2. What is my value gap?
3. How do baby boomer clients affect my
business value, profit and succession?
Agenda
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• Sole practitioners are baby boomers
• Most sole practitioners are unprepared
• Valuations and funding are integral components
of succession planning
• Previously a sound method to determine the
profit multiple has not existed
• Understatement of value could be catastrophic
for your retirement lifestyle
Succession PlanningA major strategic event
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• New on-line technology is providing for fast,
accurate and cost effective valuations
• Determines the profit multiple when valuing
a business
Business Valuations
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Case Study - Part A
What is my business value?
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Business Valuation
Sell business
Be in position to retire within 5 years
$175KGross remuneration
Succession Plan
57Age of owner
Personal
100%Ownership
$75KWA NEBIT (15%)
$500KIncome
Business
Current business value?
Planning Outcomes
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1. Profit
2. Free Cash Flow Factor
3. Cost of Funds
4. Indicative Tax Rate
5. Investment Payback Term
5 Inputs
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Case Study - Part B
Can I afford to sell?
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1. Business value needed at sale?
2. Period before you can afford to sell?
3. Fee and profit target?
4. Growth strategies?
Value Gap Analysis
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Value Gap
$175KProj. debt (personal/business)
Sell business$620KProj. invest assets (excl. home)
Be in position to retire within 5 years
Succession Plan
$85KDesired retirement income
Personal
Future fee income, profit and business value
Protect and grow fee income
Planning Outcomes
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• Plan well in advance
• Take the time to document a plan
• Be in control, don’t have your choice imposed
upon you
• Manage your value drivers
Wake Up CallWhat you need to do
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How can I close my value gap?
Protecting, growing and realising value
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• Not reliant on the owner
• Good systems
• Quality clients
• Loyal and committed staff
• Innovative and different
• Benchmark performance
• Succession planning
Value Drivers
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• Agree segmentation strategy
• Determine segmentation criteria
o Preliminary - Top 5 Clients & Fees
o Advanced - Quantitative and Qualitative
• Run segment report
• Identify client risk and opportunities for growth
Client SegmentationRisk or opportunity?
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• Calculate your average fee
• Multiply your average fee by segmentation
multiplier
• Prepare list of clients per fee category
• Calculate your client sensitivity risk
PreliminarySegmenting by fees
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Growth Options
Fin
ancia
l Services
Acquisition
IT
Clien
t Su
ccessio
n P
lann
ing
Advisory
Client List
Merger
Plan
Growth
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• Protecting fees
• New income
• Next generation of clients builds long-term
value
Client Succession PlanningSecuring your future
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Client Succession Planning
A systemised approach
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Engaging your clients
Retain ClientsBuild Firm Value
Sell when you want to
SegmentClients
AgeBusiness Value
StaffFees
ImplementEducationProgram
Capture Client’s attention with a
mix of active and passive marketing
Surveys and Worksheets, Articles, Case Studies and Newsletters
Step your clientthrough
Advice Model
ConfirmDemand
Integrate intoservices model
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Peace of Mind
Having an end game
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Value Gap Comparison
Current
Business income $500K
5 years
Business profit (15%)
Business value
Business value needed
Value shortfall
$75K
$772K
($434K)
$338K
Business income
Desired profit target 43.9%
$K
Business profit (%) $K
Business value $K
Business value needed $K
Value shortfall($K)
Desired profit target 82%
How long before you can sell 17 yrsHow long before you can sell
3
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• Searle Sessarago & Partners
“Our Value Gap has reduced by close to $1M
over the last 12 months”
Working on not in the business
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• Complete a Guide to Effective Succession Planning
o Cost $275
• Calculate your value gap analysis on-line
o On-line ($275) or consultation $660
• Value your business
o Cost $990
• Offer succession planning services to your clients
o Become an alliance partner
o Outsource to Bstar
Take Control!
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Thankyou
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