Is there a demographic time bomb in your client base?

1. Business Valuation Value Gap Analysis Succession Planning for your Clients Is there a demographic time bomb in your client base?

2. Agenda • How do I value my business? • What is my value gap? • How do baby boomer clients affect my business value, profit and succession?

3. Succession PlanningA major strategic event • 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

4. Business Valuations • New on-line technology is providing for fast, accurate and cost effective valuations • Determines the profit multiple when valuing a business

5. What is my business value? Case Study - Part A

6. Business Valuation Business Succession Plan Income $500K Be in position to retire within 5 years WA NEBIT (15%) $75K Sell business Ownership 100% Planning Outcomes Personal Current business value? Age of owner 57 Gross remuneration $175K

7. 5 Inputs • Profit • Free Cash Flow Factor • Cost of Funds • Indicative Tax Rate • Investment Payback Term

8. Can I afford to sell? Case Study - Part B

9. Value Gap Analysis • Business value needed at sale? • Period before you can afford to sell? • Fee and profit target? • Growth strategies?

10. Value Gap Personal Succession Plan Desired retirement income $85K Be in position to retire within 5 years Proj. invest assets (excl. home) $620K Sell business Proj. debt (personal/business) $175K Planning Outcomes Future fee income, profit and business value Protect and grow fee income

11. Wake Up CallWhat you need to do • 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

12. Protecting, growing and realising value How can I close my value gap?

13. Value Drivers • Not reliant on the owner • Good systems • Quality clients • Loyal and committed staff • Innovative and different • Benchmark performance • Succession planning

14. Client SegmentationRisk or opportunity? • Agree segmentation strategy • Determine segmentation criteria • Preliminary - Top 5 Clients & Fees • Advanced - Quantitative and Qualitative • Run segment report • Identify client risk and opportunities for growth

15. PreliminarySegmenting by fees • Calculate your average fee • Multiply your average fee by segmentation multiplier • Prepare list of clients per fee category • Calculate your client sensitivity risk

16. Growth Growth Options Advisory Acquisition Merger Financial Services Client Succession Planning Plan IT Client List

17. Client Succession PlanningSecuring your future • Protecting fees • New income • Next generation of clients builds long-term value

18. A systemised approach Client Succession Planning

19. Engaging your clients

21. Having an end game Peace of Mind

22. Value Gap Comparison Current 5 years $500K $K Business income Business income Business profit (15%) $75K Business profit (%) $K Business value $338K Business value $K Business value needed $772K Business value needed $K Value shortfall ($434K) Value shortfall ($K) How long before you can sell 17 yrs How long before you can sell 3 Desired profit target 43.9% Desired profit target 82%

23. Working on not in the business • Searle Sessarago & Partners “Our Value Gap has reduced by close to $1M over the last 12 months”

24. Take Control! • Complete a Guide to Effective Succession Planning • Cost $275 • Calculate your value gap analysis on-line • On-line ($275) or consultation $660 • Value your business • Cost $990 • Offer succession planning services to your clients • Become an alliance partner • Outsource to Bstar

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