The Advisor’s Dilemma
May 4, 2010 by Harvey Wigder
I belong to two professional associations that consist of seasoned advisors who consult to family and private businesses. To get the juices flowing, we sometimes discuss cases that highlight issues and make us think about common concerns and ways we can collaborate to provide the most value to our clients.
Let’s look at the structure of a typical case. The case starts with the history that resulted in the company’s origins and place in its market. Generally the cases present a company that is a going concern and has, at its core, a foundation for a good future. However, there are problems. It almost always is declining profits. Underlying and contributing to this are problems with funding, sales, marketing, customer service, and operations. There will also be further underlying concerns about family dynamics, the quality of owner leadership, and the quality of the management team.
The advisors who discuss these problems offer different perspectives:
- Those who are accounting oriented, analyze the content and nature of financial data to get to the issues that seem to most affect the bottom line.
- The M&A specialists talk about what has to improve to make it more attractive for buyers and fetch a higher price.
- The business and turnaround consultants focus on the strategies they implement to turn the company around.
- The lawyers offer up the legal tools to draw up buy sell terms and related succession plans, but usually need to hold off until other issues are resolved.
- Estate planners outline strategies to preserve and grow wealth.
- The money manages optimize security and investment income.
- The organizational development people will see problems with leadership and will propose programs or coaching to improve planning and communications to better link human resources together to better achieve the mission of the company.
- Insurance people think of how to provide a financial safety net for the owners.
- I, as a recruiter, see opportunities to strengthen the company by introducing new talent.
We come out of these discussions with two conclusions:
The first is that the situation is much too complex for any single discipline, and in an ideal world, several would collaborate to help the owners solve complex and interrelated problems.
The second is a desire for, what I will call, the Holy Grail. By this I mean each discipline knows it has an important role to play with a focused successful company. What we all seek is company leadership that has an intelligent, well implanted business plan which leads to growth along with leadership who has an exit or transition plan to ensure the continuity of the business for the long haul.
Result: This can lead to the ultimate win-win. The owner has the experience of meeting business and life goals and advisors have the satisfaction of providing valued support along the way.
As advisors, our thinking about the company is not limited by its culture, and we know all companies go through cycles and leadership strengths in earlier stages can be weaknesses in later stages. We understand there is strength in coming to grips with change and being open to new ways of thinking necessary for the company’s present reality. We also know the owner who plans for the future dramatically increases the odds of achieving the highest quality result.
Put another way, our client may benefit from a changed way of thinking but doesn’t see the need or resists taking the risks inherent in implementing change.
The dilemma is tantalizingly simple:
How hard (or perhaps, in what way) should a trusted advisor push the owner to take a broader perspective and engage the support of other advisors and coaches who will help incorporate new ways of thinking and a more planning oriented approach to the transition that is inevitable?
The best advisors put their clients first and are consistent advocates for what is best for their clients and their clients businesses – but how can they do this if the client simply does not see the forest because of the trees? What do you think?
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Great site. A lot of useful information here. I’m sending it to some friends!
great post as usual!
?Gracias! Ahora me ir? en este blog cada d?a!
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