How Are America’s Businesses Faring? Ask a Financial Advisor

Advisors in a recent survey say business owners are particularly concerned with exit planning but often overvalue their firms.

By Eleanor O'Sullivan

If you want to know how America’s business is faring, ask a financial advisor. From the Rust Belt to the Sunbelt, advisors with business owner clients hear all about what it’s like to be in retail, real estate, healthcare, agriculture, textiles, tech, energy, construction, marketing, consulting and more.

Business owners are concerned with family succession; exit planning, early retirement inspired by the pandemic, employee welfare and connecting with like-minded businesses.
Advisors say business owners need help in correctly valuing their business, and, that their ideal financial advisor is a trusted wealth manager who also helps them with life’s other pressing matters.

These were among the findings from a survey by Dynasty Financial Partners, which in April asked about a dozen independent financial advisory firms about the trends and challenges of working with business owners. Nine firms are represented in this article.

Jonathan Williams, Summit Trail Advisors

At the Summit Trail Advisors office in Harrisburg, Pa., partner Jonathan Williams said most of the firm’s business-owner clients represent family-owned businesses, with many being second-generation owners. Clients come from retail, commercial real estate management and development, oil and gas, automotive, and industrial construction. Summit Trail is part of a six-city member firm.

Williams said that although generational planning is important to Summit’s clients, a third generation taking over the business seems unlikely — “the children are not often interested in Rust Belt industries.’’

About 1,150 miles northwest of Harrisburg, with offices in Jackson and Fairmount, Minn., one advisory firm’s business owner clients, who come from the trade/service industries, are looking for support beyond wealth management.

Brittany Anderson, Sweet Financial Partners

“One challenge business owners face is feeling like they are on a lonely island, which is why they need a sense of community and support,’’ says Brittany Anderson, president and partner of Sweet Financial Partners.

Anderson said, “maximizing the value of their business at the time of sale is one of the top concerns of business owners.’’

“Business owners are beginning to look closer at who they are outside of their business, what they want to do next, and what will help them to live a vibrant, fulfilled future,” Anderson said.

She added her firm supports clients beyond wealth management. Business-owner clients are looking for a more comprehensive resource partner who can help them in multiple aspects of their lives, she said.

Ryan Quinty, Cyndeo Wealth Partners

In the Sunshine State, Ryan Quinty of Cyndeo Wealth Partners, St. Petersburg, Fla., is seeing “sales slightly slowing down with more conservative valuations occurring post-pandemic.’’

Quinty, vice president of financial planning at Cyndeo, added, “Most business owners overvalue their business and do not understand how much their participation in the operational control of their business can lower its value.’’

Business-owner clients of Cyndeo want to be sure their children are prepared to take over the family business. “Succession planning is a top concern, and focusing on it earlier allows for the creation of a more saleable business with a higher valuation that will ultimately drive revenue,” he said.

Echoing Williams of Summit Trail, Quinty said, “Business owners value comprehensive reporting and planning from financial advisors who can act as their personal CFO and be proactive in creating and executing financial strategies.’’

Dan Weeks, Nilsine Partners

In the Mountain Time zone, business-owner clients of Nilsine Partners represent the insurance, oil and gas, technology, materials, textiles, agriculture and communication services industries.

Dan Weeks, managing director of the Greenwood Village, Colo., firm said that “business owner clients tend to be multi-generational family businesses or families that have created wealth from a business sale.’’

Weeks is seeing similar patterns to those at Cyndeo in Florida: “Post-pandemic trends include slowing sales with lower valuations and fewer unsolicited offers.”

He added top trends among business owners include retirement and transitioning leadership. “Next-generation leaders often lack the capital for a buyout, so a sale requires careful planning and execution,’’ Weeks said.

“Many business owners overvalue their businesses and lack an understanding of the potential tax implications of a sale,’’ Weeks said, but other clients “have done formal valuations, and financial advisors often recommend a formal sale process with an investment banker.’’

Matt Liebman, Amplius Wealth Advisors

One-hundred miles southeast of Harrisburg in Blue Bell, Pa., Amplius Wealth Advisors has a mix of multi-generational family businesses and G1 entrepreneurs. Blue Bell is a suburb of Philadelphia, 22 miles south.

Business owners were more inclined to sell or take on equity partners from 2019-2021. However, since the market downturn in 2022, firms are focusing on managing costs rather than selling or retiring,’’ said Matt Liebman, Amplius’ CEO.

His clients come from healthcare, technology, retail energy and the industrial sector. Liebman said that business owners “are generally realistic about valuations, but they can be caught off guard by the complications of making a deal,’’ and  that “some clients go for investment banking services to sell all or part of their business while others prefer situational deals.”

Being independent, Liebman said, has “helped the advisor connect better with business owners, (who) value financial planning and risk management from financial advisors.’

Andrew Arnold, Centerline Wealth Advisors

Centerline Wealth Advisors, in the Bluegrass State, sees trends similar to other advisory firms in other regions of the country: clients tending to overvalue their business; elder owners inspired to make an early exit due to the pandemic; delaying company valuation due to its complexity and cost; and valuing a financial advisor who pulls no punches.

“Business owners value financial advisors who can hold them accountable, provide a structured approach to moving the owner through improvement cycles, and offer services such as retirement plans, insurance funding, liability protection, cash-flow management, and asset management,’’ said Andrew Arnold of Centerline, in Louisville, Ky.

About a third of Centerline’s clients are family-owned business, including engineering, construction, technology, franchise, sales, manufacturing, PSC, accounting and legal, medical practices, and of course, distilleries. Kentucky is world famous for its bourbon.
For those Centerline clients who are looking ahead, Arnold said several concerns are very human:

• Obtaining a fair price to exit

• Taking care of long-term customers and employees upon exit.

• Having enough personal wealth to forego a nice salary.

• Facing potential boredom on the other side of an exit.

Steven Tenney, Great Diamond Partners

In the country’s northernmost state on the Eastern Seaboard, Maine, Great Diamond Partners in Portland works with business owners from energy, technology, marketing, consulting, industrials and financial planning.

“The top concerns for business owners are an unknown future, including next-gen leadership readiness, financial impact, and change to liquid assets,’’ said Steven Tenney, CEO and co-founder of Great Diamond.

Those owners planning for the future, “have misperceptions about the business transition process, such as an artificial timeline for exit and ignoring market dynamics and operational readiness,’’ Tenney said.

Therefore, he said, “family-owned businesses pose unique transition challenges, and focusing on what’s best for the company rather than the family, enhances value.’’

Charlie Dunn, Intergy Private Wealth

Three time zones away, in Colorado Springs, Colo., these concerns are repeated. Charlie Dunn, managing partner of Intergy Private Wealth, says post-pandemic, family business owners are finding higher interest rates have slowed increases in valuations and number of transactions. “The top challenge is helping clients define their ‘number’ for a strong sale price, and optimizing benefit packages to attract and retain talent,’’ he commented.

Intergy’s clients come from hospitality, manufacturing services and construction businesses. They are most concerned about taxes and exit/succession planning. Dunn sees the familiar trend of “Generation 1 transitioning to generation 2 in family businesses, with challenges around compensating founders and/or funding buyouts. Business owners believe their business is worth more than the market will actually bear,” he said.

He addresses those issues, in part, by explaining industry multiples and the importance of healthy balance sheets.

Louis Gloria Jr., Procyon Partners

Another survey participant was Procyon Partners. The six-city advisory firm is based in Shelton Township in Connecticut’s Fairfield County, also home to Bic, Computershare and Prudential Annuities. Procyon’s business-owner clients are from corporate America and larger firms within their particular industry, says Louis Gloria Jr., managing director.

He says that the firm’s business owners “have reasonable expectations about valuations and become educated on likely ranges as the process unfolds.

These owners also value civility in their business. “Maintaining the culture and history of the business is a top concern for business owners during exit/succession planning, along with tax implications and future plans,’’ Gloria said.

These clients also have a sophisticated grasp of investment options. “Business owners often invest in public market investments, private real estate, private equity, hedge funds, private credit, and others, and may also set aside a portion for investment in other entrepreneurs.’’

In a four-decade career in journalism, Eleanor O’Sullivan has reviewed many books on best practices for financial advisors, has written for Financial Advisor and the USA Today network, and was the movie critic for the Asbury Park Press.

Latest news

Which Cities Have the Longest and Shortest Commutes?

Taking the car is faster and more expensive than using public transit, the Coast study of 100 U.S. metro areas confirms.

Former Army Financial Counselor Guilty of Defrauding Service-Member Survivors

He manipulated members of at least two dozen Gold Star families into transferring $9.9 million of benefits into accounts he controlled.

What’s Up with U.S. Energy Shares?

U.S. energy shares have soared this year, roughly double the amount of the broader S&P 500 index. Here's why.

Thera Elliott joins Raymond James Financial Services

The Boca Raton-based independent advisor switches from Wells Fargo, where she managed $105M in client assets.

Schwab AUM Fees Up, Profit Down

Schwab had a difficult 2023, the most challenging year for the company since the internet bubble burst in 2000, according to CEO Walter Bettinger.

Vermont Seeks to Mandate Workplace Retirement Plans

Vermont is looking to partner with Colorado to jumpstart its new auto-IRA program for private-sector workers.