The Ownership Transfer Matrix
One of my favorite influencers is Z. Chris Mercer, ASA, CFA, ABAR and author of several books on business valuation and wealth management. Chris possesses the knowledge, skills and ability to help owners understand and effectively manage their business wealth. I first found him when I was immersed in learning as much as I could about business valuation several years ago. Watching his videos and reading his books helped me along the way to get better at business valuation. But Chris is much more than a top tier business valuation practitioner and advisor; he is also an expert explainer.
The ownership transfer matrix is one of Chris’ Explainer Gems. This is every business owner’s reality. Ignore it at your own risk.
There comes a day when you will transfer all or part of their business. As Chris explains in “Unlocking Private Company Wealth” there are only four ways in which you will transfer ownership. It will be Voluntary or Involuntary and you will transfer all or part of your business interest. It is best to plan for this well in advance.
You don’t have to work your brain too hard to see the beauty of The Matrix. It frames the root problem to be solved. Within each of the four boxes you can formulate your strategy for the different options you want to have available to you or others should a transfer event occur. This type of planning keeps you in control, maximizes value and minimizes taxes and financial loss. Just have a plan for what you want in each of the four boxes.
Sometimes it seems like there are a million choices and options and a million decisions to be made. Fortunately this is not the case. As we talk with business owners our time is mostly spent in the lower two boxes. Our goal is to plan for the unexpected to safeguard the value and viability of the business for all stakeholders. Working within the framework of the matrix keeps the planning process on track and prevents wandering off on time wasting tangents.
The matrix helps you ask better questions and forces you to face facts. How prepared are you. What have you done to plan for the time you will no longer own all or part of your business? When you fail to plan you are subjected to The Law of Unintended Consequences.
“Unlocking Private Company Wealth” is one of the books we recommend to all business owners and advisors of owners without fail. It is full of wisdom and insights for business owners. In part two of this series we will look at The One Percent Solution also from his book.
Hear Chris in his own words in this short video.
Peter Viliesis and I want to talk to you to answer any questions you may have or to give you more information about the Business Value Protection Planning™ system. There is no obligation and maybe we will find we are a good fit for you, your business or your client’s business.