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Amber: Hello TPR Nation. This is
Amber Kuhn. Thank you for

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joining me on today's Follow up
Friday, where I'll be recapping

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this week's episode highlights
and action items. On Monday,

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Matt was joined by Ted Jenkin
from Oxygen Financial Exit Stage

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Left Advisors and JPTD partners
to talk about the reality of

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valuations in the RIA space. Ted
shared that most advisors are

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operating under this assumption
that practices are valued at

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around 3x using those
traditional methods, but he said

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the number is a way off from
what some buyers and private

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equity firms are actually paying
on the open market. He said the

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way to maximize your valuation
is through the marketplace, and

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that you could get a much higher
multiple than you would by

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selling it to just someone down
the hall. For those larger RIAs

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over 500 million Ted said those
multiples can reach 14 to 17x

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cash flow, and that the driver
is arbitrage. These buyers can

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acquire the firm at a lower
multiple and then realize higher

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valuations by tapping into
capital markets. Ted shared that

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as an advisor, you need to
evaluate the velocity of money

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to maximize your own net worth
and consider what's going to

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build your net worth the
fastest. Matt and Ted also

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talked about Gen 2 advisors and
how they don't necessarily have

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to buy a practice. Ted said some
buyers will offer Gen 2 advisors

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the chance to receive equity in
the practice after a period of

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time as an employee and
potentially resell it. So

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selling to those external buyers
could end up being better for

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Gen 2 advisors than an internal
succession. Now for advisors

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still in a heavy growth mode,
Ted recommends considering

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acquiring undervalued practices
to create your own arbitrage

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play, or, he said, better yet,
if you can prove you have

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organic growth, you then have
the opportunity to get more for

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your practice relative to just
the numbers. Matt and Ted

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wrapped up by pointing out how
cultural fit and alignment on

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things like investment velocity
are critical to ensuring that a

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sale doesn't end up becoming a
nightmare scenario. Let's get

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into action items. Listen to
Ted's Kitzes episode, which we

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have linked in Monday show
notes, visit

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JPTDpartners.com/theperfectria,
and this will include a T minus

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two year checklist to prepare
yourself if you want to go to

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market and test it out and then
a list of the top 10 client

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acquisition techniques from Ted.
On Thursday, Jamie was ready to

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talk about S corps, but she said
what s really stands for is

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shenanigans. Because she said
that's what she sees a lot of

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business owners do, over and
over again. She then went into

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the conversations that she has
about how to design and

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structure different entities.
One of the key points that she

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made was that importance of
having a clear long term vision

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and strategy when you're
starting that business. She

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said, Look beyond that initial
setup and consider factors like

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exit strategies and succession
planning from the very

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beginning. So the first thing
that she does is take a legal

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assessment, so how many people
are coming into the

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organization? She then wants to
get what the goal is in the next

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five to 10 years, and what's
that ultimate outcome. The

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reason is because many people
start an organization, but they

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don't get themselves an exit
strategy. She likes to do a lot

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of vision mapping, as opposed to
creating a business plan. And

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this will focus on what things
look like long term. From there,

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Jamie will do a SWOT analysis,
and she pointed out that she'll

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put the business owner's name
and her strengths and

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weaknesses, because she said the
success hinges on that person.

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She wants to identify that and
get the owner thinking about how

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their business is bigger than
them. After that, Jamie wants to

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choose a legal structure. She
said this is where you want to

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bring in a business attorney.
Also during this time, she said

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that you'll hear the reasons why
an LLC protects people, but also

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about piercing the corporate
veil. She said, if you set up

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LLC, you then have to abide by
those laws and regulations and

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how it should be operated, and
if you fail to do the work to

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create and maintain it, then
you've pierced the corporate

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veil, and then you lose that
liability protection. She talked

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about how things can get sloppy
for you and your clients when it

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comes to commingling assets, and
when those personal and

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corporate assets are mixed and
money is being transferred, or

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when deposits are made in a
personal accounts, because then

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it just makes it hard to
distinguish the two. Jamie

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mentioned a couple of other ways
that advisors get sloppy with S

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corps. She said, What are you
doing on the profit and loss

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sheet, where you're writing
things off just because you're

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getting a business deduction?
Said, it's great to get this

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legitimate tax write offs, but
you need to document things. The

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other way that people get slobby
is the failure to have a

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succession plan in place. She
said, You need to look at what

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you're doing with how are you
transitioning your clients, you

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also need to have disability
insurance on yourself now. With

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succession, she said consider
what agreements you have in

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place right now, and what do
your clients know about it. She

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reminded everyone that you're
required to disclose your

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disaster recovery, so make sure
that you not only have this map

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out, but that you've
communicated this with the

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people involved. She said that
regardless of your long term

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plan you want to build a
business that you could sell

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tomorrow. So keep your
financials clean. Everything

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needs to be evidence and
verifiable. Let's get into

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action items. Review your
financials. Look at whether you

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could potentially have your own
corporate vail pierced. So if

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you're not operating
efficiently, what do you need to

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do today to make sure that you
are, what write offs are you

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taking that you need to document
and show justification for? And

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lastly, what is your succession
plan? Make sure that you have it

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documented, communicated, and
that it's part of your long term

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cleaning strategy. Before we go
TPR Nation, we just wrapped up a

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Nation Power Session this week,
and enrollment is open through

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Monday, June 17. If you're
looking for how you can double

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your practice in 12 to 36
months, reach out to us at

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lifestyle@theperfectria.com.
Thank you for joining me today,

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and be sure to give us five
stars wherever you're listening

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and share this or any of our
episodes with another advisor or

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team member who you think might
benefit. Until next time, happy planning!