Whether you are looking to exit now or simply gauge your readiness, knowing who to work with in your important periods of business transaction and transition can make all the difference. Our team offers a methodical planning process to assess your situation, uncover unforeseen challenges and provide insight that helps empower educated financial decisions.
The value of our advice
Pre-sale planning helps create a successful transition
We met our two clients, a Founder and President, just two years into their company’s existence. They introduced us to other key stakeholders, both relatives and employees, who also became clients in short order. Together, our clients owned approximately 40% of the company.
For each client, financial and estate planning was virtually non-existent prior to meeting our team. Their company was quickly becoming a major player in its space, and they were fielding unsolicited offers to acquire it. A sizable exit, in due time, was the likely outcome.
Our end-to-end process and ongoing relationship focused on providing comprehensive guidance from the beginning stages of the company with $250k revenue, to five years later when it hit $100M in revenue, to the point at which they were ready to sell for close to $1 billion. As we approached our clients’ liquidity event, we needed to work diligently with them to: 1) provide education on pre-liquidity estate planning strategies so that their longterm objectives were tax-efficiently addressed in estate planning documents; 2) plan for cash flow needs through their exit; and 3) address potential risks.
Because we have experience working with many entrepreneurs through the sale of their businesses, and we have forged the appropriate relationships inside and outside of UBS, we were able to help ensure that clients optimized their exit. After various individual meetings with each client, we began to execute on a prioritized road map of deliverables, some known upfront and others that materialized along the way.
When the day arrived, our clients sold their company with all of their “i’s” dotted and “t’s” crossed. They felt confident that they had maximized the event. With a successful sale, one client is now a key senior executive for the acquirer. Another is working with UBS to explore the potential of establishing a family office for the benefit of all family members.
Optimizing an exit
A road map of deliverables
30 months prior to sale
We introduced our clients to the head of UBS‘s Advanced Planning group in Texas. Together, we discussed estate planning disciplines essential to key stakeholders in their situation. We created a Strategic Wealth Assessment that provided an overview of their current estate plan, if any, and a go-forward strategy. Subsequently, we introduced our clients to an estate attorney to draft and execute basic estate documents, including wills, powers of attorney and medical directives. Most importantly, we offered advanced planning guidance to help address tax efficiency and asset preservation.
We introduced our clients to our Corporate Trust Network for inclusion in respective estate plan documents. Different trust companies were chosen per clients‘ individual needs.
We recommended a higher personal liability umbrella policy to align insurance coverage with a growing company value. We also recommended the purchase of an economical term insurance policy in light of an illiquid estate pre-sale.
18 - 24 prior to sale
We helped streamline our clients’ finances by opening UBS accounts, helping to manage cash flow per client needs, and setting budgets based on our extensive financial planning. We provided access to UBS’s competitive banking and lending services.
12 months prior to sale
We connected clients with a CPA experienced in working with families of substantial means.
Each client wished to explore charitable strategies. Working collaboratively with our UBS resources, and their CPA and estate attorney, we developed a strategy to gift a portion of ownership to a Donor Advised Fund pre- or post-sale.
6 - 12 months prior to sale
We worked with UBS’s Tailored Lending Group, leveraging our clients’ corporate stakes, essentially serving as a cash flow bridge between their go-to-market stage and the actual exit. UBS’s investment bank assisted Tailored Lending with valuation overview and prospects for the company.
0 – 2 months prior to sale
In collaboration with UBS’s Chief Investment Office and Portfolio Advisory Group, we created an investment plan for each client and their families. These explicitly matched capital and investment type to address particular short-, intermediate- and long-term objectives.
We introduced UBS’s Family Office Solutions Group (FOSG) to educate each client on family office structures and tax considerations.
Identifying greater yield for our client’s corporate cash
Our client is the Founder and CEO of a company that was in the midst of closing the first tranche of a $100 million Series C funding. He introduced our team to his CFO to discuss the company’s cash management approach and to help determine if it could be enhanced.
Up to that point, the prospect of enhanced yield and a more robust approach to cash management had not been a priority. Now, our client wanted to ensure that he and the company were being wise stewards of their soon-to-be raised capital.
Our team met with the company CFO to discuss their existing Investment Policy Statement and assess the cadence of expected cash flow and various concerns that were top of mind. Four goals were promptly identified during this and subsequent conversations: 1) potential for greater yield while maintaining focus on daily liquidity, operational needs and preservation of capital; 2) portfolio diversification aligned with their concern for greater yield; 3) adoption of a well-constructed Investment Policy Statement (IPS) focused on yield and diversification; and 4) providing the CFO, Controller and their teams with finger-tip access to an array of on-demand, detailed and compliant reporting capabilities.
Our team was agnostic and presented various cash management solutions. Specifically, we offered an introduction to multiple cash management teams inside and outside of UBS. We assisted our client in reviewing various cash management groups to assess the integrity and robustness of the company’s preexisting IPS. Recurring feedback from those vying for the cash management mandate showed us that various segments of the IPS could be improved upon for the benefit of the company and its fiduciaries.
In the end, the client hired UBS’s Asset Management (AM) to manage the assets and our team services the relationship from a banking and portfolio commentary standpoint. Additionally, AM’s portfolio managers avail themselves to the client by phone and in-person.
We moved the needle for the client in a meaningful manner. Portfolio yield increased by approximately 150 basis points. This incremental income enhanced portfolio income by more than $1 million. Today the UBS portfolio is robust and diversified. It is allocated to A-rated or better fixed income instruments and, per their IPS, maintains a portfolio duration of less than 0.30.
On-demand reporting capabilities are provided (at no charge) to our client through AM’s relationship with a leading third-party provider. They offer robust web-based investment portfolio accounting, reporting and reconciliation services for institutional clients overseeing more than $3 trillion in assets.