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Building Your SUCCESSION-PLANNING Team
Who Do You Need on Your Side When Selling a Business ?
BY MICHAEL RAINE
When should MI owners begin their succession planning ? If you own a store and haven ’ t begun laying that groundwork , then you ’ re behind schedule . It doesn ’ t matter if you ’ re 32 or 62 , succession planning should begin practically the moment you take ownership , according to Jaimie Blackman , a New York-based financial planner and president of BH Wealth Management , who is a former MI store owner himself . If fact , he can give you the precise moment this became apparent to him .
“ I live on Staten Island in New York City and Stan Jay operated a very famous store for 40 years called Mandolin Brothers . His clients included Paul McCartney , George
Harrison , Bob Dylan , and Joni Mitchell . You ’ d walk into this store and you ’ d see 800 or 900 guitars , mostly vintage . It was the place to go and I was a customer for maybe 20 years ,” Blackman recalls . “ I walk in one day and there are no instruments on the wall . The place is empty . So , I knew Stan Jay ’ s children , who were managing the store , and I said , ‘ What ’ s going on ?’ They said , ‘ Father died suddenly .’ There was no succession plan in place , no estate plan in place . He had what they call an ‘ I love you will ’ where all of the shares go to the wife , who is not as involved as the children were who were actually managing the day to day . As a result , the children didn ’ t have any say on what was going on . The mother felt that she wanted to liquidate and pretty much shut down the business .”
This left Blackman “ stunned ,” he says , and the memory is on his mind every time he discusses succession planning – as he has done for NAMM U sessions . The problem , he says , is that during NAMM U and other such presentations , the audience often asks the wrong questions .
“ They all ask , ‘ What can I get for my business ? What is my business worth ? If I have this amount of earnings , what ’ s the multiple ?’ They ’ re asking the wrong questions . A better question would be , ‘ Under what circumstances can I maximize the value of my business ?’ Something where there is some thought that goes into it before , ‘ What ’ s my business worth ?’ This is a process and the value of a business is nothing more than the risk that the buyer perceives ,” Blackman explains . “ You build your business
28 CANADIAN MUSIC TRADE