The Three Pillars of an Exit Plan – A Post-Pandemic Tune-Up

The Three Pillars of an Exit Plan – A Post-Pandemic Tune-Up

Published on Aug. 25, 2021

The United States appears to have decisively turned the corner on the Covid-19 pandemic, following a year mired by uncertainty and change. The U.S. jobs market is heating up, households are armed with savings, and U.S. corporations delivered better-than-expected earnings in Q1 2021.

Investors, businesses, and consumers are focused on the future, and that’s great news.

Over the past few months, I have been talking to family, friends, colleagues, and clients in funeral service about lessons they have learned in the past year. I’m curious how folks think the future will look different. Interestingly, just about everyone gives a different answer about the future of work, life, and daily interactions. To me, the variety of responses is the clearest indication that the uncertainties of the past year have given way to uncertainties about the future.

To me, there is no better way to counter uncertainty than by making a thoughtful, detailed, and ultimately written plan. For many funeral service and cemetery professionals, this may mean taking a look at your business, its value, and your personal financial goals to ensure you have a clear vision for what you want the future to look like. In other words, now is the time to give your financial plan and your exit plan a post-pandemic tune up. I’ll focus on what you need to know for your exit plan here.

The Three Pillars of an Exit Plan

The three pillars of an exit plan are really three sets of questions that funeral service and cemetery business owners need to ask themselves.

Question 1: In order to leave or sell your business, how much would you need to receive in equity and/or after-tax proceeds?

Within the context of the pandemic and the past year, a key data point for all business owners is figuring out how much your business valuation changed. Did the pandemic cause it to increase or decrease? Do you think pandemic-driven forces – like changes to real estate prices, the jobs market, technology’s effect on how businesses offer services, and the changing wants and needs of client families  – bode well for the future of your business or work against it?

Answering these questions will not only give business owners a sense of what their business is worth today, it can also begin to address key questions about how the business’s valuation could change in the years ahead.

Another critical issue to think about here is what could happen to the value of your business if tax rates move higher. While we are not tax experts and we urge you to speak to your tax advisor about these issues, here is a hypothetical example to consider:

  • Scenario 1: Business owner sells his business in 2021 for $1,500,000. Using 20% federal capital gains rates, the owner receives $1,200,000 net of taxes.
  • Scenario 2: Business owner sells his business in 2023 for $1,500,000. By then, capital gains rates have increased to match ordinary income rates (39.6%) for those who earn more than $1,000,000. In this scenario, the owner receives $906,000 net of taxes.

The $300,000 difference between the two scenarios is not a small sum, which is precisely why these types of issues should be front-and-center in exit planning today.  

Question #2: When do you want to leave or sell your business?

The decision whether to sell now versus later can be dictated by tax expectations, as demonstrated above. But owners also need to consider the conditions throughout the profession and personal circumstances.

In the funeral service and cemetery profession, an owner may want to strongly consider selling during a period of heightened consolidation, attractively-priced deals, and low cost of capital (for example). The macroeconomic environment also plays a role – if the economy is in growth mode and expanding, there may be more years left in the cycle to accumulate additional value.

On the personal side, many owners need to weigh factors like lifestyle needs, desire to retire versus to work, family life, and/or desire to pursue philanthropic pursuits. At the end of the day, what the business owner wants for themselves personally needs to play a decisive role in how an exit plan is shaped.

Question #3: Who are the possible successors or acquirers of the business?

In all likelihood, the pandemic revealed new information about prospective successors or buyers for the business. Maybe the key employees you had in mind to take over the business struggled to meet the challenges posed by the pandemic. On the flip side, maybe you were surprised by how a family member or a third party stepped up over the past year, shifting your thinking completely about who is best suited to take over the business.

At the end of the day, finding and training a successor is almost certainly a multiyear process, requiring a lot of attention and energy. Owners should consider whether the pandemic made it more – or less – clear who is qualified to lead the business into the future.  

The last point to make is that exit planning is a dynamic, methodical, ongoing process – it is not a single event! Owners should not expect to make an exit plan once and never revisit it. Over time, financial situations change, timelines change, personal needs change, taxes change, and the economics of funeral service changes. The pandemic, of course, was a catalyst for change – which to me means owners and investors need to respond by tuning up your financial and exit plan now.

Read the full article

Source: Published in Memento Mori magazine

Nicki Price Adams is the Face of Wealth Management in American Funeral Director

Published on Jul. 16 2021

July 2021: Nicki Price Adams is the Face of Wealth Management in American Funeral Director

Read the Full Article Here

SELECTED The Bulletin: “Understanding Your Retirement Needs is Key to Effective Succession Planning”

Published on Jan. 5, 2021

January 2021: Corie Gabriel and Nicki Price Adams Featured in Selected Independent Funeral Home’s The Bulletin Article “Roosevelt Investments: Understanding Your Retirement Needs is Key to Effective Succession Planning”

Corie Gabriel is Director and Nicki Price Adams is Marketing Manager of the Private Client Group at SELECTED Preferred Partner Roosevelt Investments. They recently spoke to the bulletin about the services they offer and their support of SELECTED’s Funeral Home + Cemetery Management Community.

Read the Full Article Here

December 2020 Memento Mori: “Stop Procrastinating and Start Focusing on Your Exit Strategy” by Tim Hermann

Published on Dec. 3, 2020

December 2020 Memento Mori: “Stop Procrastinating and Start Focusing on Your Exit Strategy” by Tim Hermann

Read the Full Article Here

July 2020 Memento Mori: “Maximizing Income in a Perpetual Care Fund” by Adam Sheer

Published on Jul. 27, 2020

July 2020 Adam Sheer’s Article in Memento Mori: “Maximizing Income in a Perpetual Care Fund”

Read the Full Article Here

July 2020 American Funeral Director: “Asking the Right Questions Amid the COVID-19 Pandemic” by Corie Gabriel

Published on Jul. 8, 2020

July 2020 American Funeral Director: “Asking the Right Questions Amid the COVID-19 Pandemic” by Corie Gabriel

Read the Full Article Here

July 2020: Nicki Price Adams is the Face of Wealth Management in American Funeral Director

Published on Jul. 8 2020

July 2020: Nicki Price Adams is the Face of Wealth Management in American Funeral Director

Read the Full Article Here

The Director: “Decoding Succession and Exit Planning” by Vicki Fillet

Published on Jan. 24, 2020

January 2020 The Director: “Decoding Succession and Exit Planning” by Vicki Fillet

Source: The Director, a publication of the National Funeral Directors Association

Read the Full Article Here

The Director: “When It Comes To Succession, We All Have Succession Issues” by Steven Wasserman

Published on Nov. 13, 2019

January 2019 The Director: “When It Comes To Succession, We All Have Succession Issues” by Steven Wasserman

Source: The Director, a publication of the National Funeral Directors Association

Read the Full Article Here

August 20, 2018 Press Release: Steven Wasserman and Nicki Price Adams Join Roosevelt Investments

Published on Jul. 22, 2019

August 20, 2018 Press Release: Steven Wasserman and Nicki Price Adams Join Roosevelt Investments

Read the Press Release Here

Roosevelt Investments Donates $60,000 to the ICCFA Educational Foundation

Published on Jul. 9, 2019

Roosevelt Investments Donates $60,000 to the ICCFA Educational Foundation

Source: July 2019 ICCFA Magazine

Read the Full Article Here

May 2019 The Director: “Charting the Course” by Vicki Fillet

Published on May 1, 2019

May 2019 The Director: “Charting the Course” by Vicki Fillet

Source: The Director, a publication of the National Funeral Directors Association

Read the Full Article Here

March 22 2019: Adam Sheer’s Interview on Funeral Nation TV

Published on Mar. 22, 2019

March 22 2019: Adam Sheer’s Interview on Funeral Nation TV

Check out Adam’s interview regarding our collaboration with The Foresight Companies, LLC. serving the funeral services and cemetery professions. The interview on Foresight Roosevelt Wealth Management takes place between timestamp 7:30 and 18.

Watch Here

March 19, 2019 Press Release: Roosevelt Investments Announces Dynamic New Collaboration with The Foresight Companies

Published on Mar. 19, 2019

March 19, 2019 Press Release: Roosevelt Investments Announces Dynamic New Collaboration with The Foresight Companies

Read the Press Release Here

October 10, 2018 Press Release: Roosevelt Investments Acquires Value Architects Asset Management and Blueprint Financial Planning

Published on Oct. 10, 2018

October 10, 2018 Press Release: Roosevelt Investments Acquires Value Architects Asset Management and Blueprint Financial Planning

Read the Press Release Here
Roosevelt Investments