Pack Ball: Who’s on your deal team?

April 01, 2018

When I was a kid, I played competitive soccer. The game my dad referred to as “pack ball” when I was 4 or 5 evolved dramatically by the time I hit middle school. You see, in the beginning, there are no positions that players take. Every kid on the field literally chases the ball together in a pack. It is quite low scoring because the kids have no idea how to dribble the ball, and it is nearly impossible to get a clear (or even accurate) shot on goal with four other kids running in the way.

Over ten years of play, however, the game evolves. Defenders, Midfielders, Goalies, and Forwards all have a part to play, and, at the highest level of play, kids know how to stick to their position and do their job for the team. Defenders rarely score goals and Forwards almost never come up with game winning slides on defense. And this is the way the game works best. Teams are most effective when every member has a role and every role is filled.

Planning for a business exit is quite similar, and all too often I meet business owners who are playing pack ball, a man or two down, with their business transition. For example, I recently met a young business owner who is buying a profitable service company from a gentleman who is exiting the business to retire. The buyer and seller each engaged an attorney, and a business broker helped to facilitate the match. The seller’s CPA prepared financial documents to demonstrate profitability and support the sale price, and the buyer secured financing from a business banker who’s team approved the transaction price.

The sale of the company was structured in three parts: an initial purchase, a subsequent purchase for the remaining ownership after several years, and a final sale of real estate leased by the business, but owned by a separate company. The reason for the staggered deal was to allow the seller more time to transition out of ownership and to provide flexibility for him to buy the company back if the new owner floundered. But the execution of the details reveals significant planning mistakes that are already impacting the co-owners, who just completed phase one.

Mistake #1: The initial purchase was for 50%. I almost always recommend that a seller retain control until he or she get all of her money at the final closing. A sale for 50% creates unnecessary tension and costs the seller his ability to make unilateral decisions about the best course for his business. This lack of control often has ripple effects into the way the seller relates to the business and the seller’s ability to adequately accomplish non-business goals for his personal life and his family.

Mistake #2: Risk factors were unaddressed. In the plan to sell this service company, the only contingency that the deal team planned for was the potential failure of the new owner; even this was addressed poorly because of the seller’s lack of control over the company. Each business exit plan should include answers to questions about liability exposure, disability of owners or key employees, premature death of owners or key employees, and the risk that key managers could walk away and leave either owner scrambling to run the business without them. Any one of these events occurring could be devastating and none of them were adequately planned for.

Mistake #3: Both the seller and the buyer were missing key advisors. Each of the parties listed above in the transaction team are necessary. They all have a role. But several important advisors were missing. For example, none of them were tasked with the responsibility of understanding how business decisions impact personal life. None of them could speak into business consulting issues or the relationship issues that evolved because of the poor deal structure discussed in Mistake #1. And, perhaps most importantly, the owners had full responsibility to make sure the right questions were asked and answered appropriately.

Look for these core advisors on most business exits: Certified Exit Planner, business transaction attorney, CPA, valuation firm or professional, business broker or investment banker, estate planning attorney, insurance agents, financial advisors, and possibly consultants and/or coaches. Many advisors can wear more than one hat, but each seat needs to be filled to create the highest degree of certainty that the owner’s emotional and financial goals can be achieved.

The key issue of transaction naivete was probably the driving factor in all the negative deal outcomes and, all things considered, the negative results facing the owner I met are relatively mild. Sometimes naivete will kill a deal and ruin future sale opportunities.

As you evaluate your own exit from your business, remember that most business owners will only sell a company once and that they don’t know what they don’t know. A Certified Exit Planner is uniquely qualified to identify risk factors, deal structure issues, and even missing advisors on the owner’s team. An Exit Planner is not an expert in each discipline, but he or she will have the ability to ask the right questions and coach an owner to fill out their deal team roster. After all, who’s going to score if you only put goalies and defenders out on the field?


Just after college, Austin experienced profound loss with the early and unexpected death of his father. The positive impact of financial planning for his family eventually led him to pursue a career in financial service, and he joined Wealth Advisory Group in 2013. Austin received his bachelor’s degree from the University of Evansville, summa cum laude and has obtained the Retirement Income Certified Professional® designation from The American College. He is a member of the BEI Network of Exit Planning Professionals™ and is a Certified Exit Planner™.

Austin’s practice specializes in risk mitigation and wealth planning for business owners and medical professionals. His team provides expert wealth management, personal planning, and business transition planning for physicians, executives, and entrepreneurs.

Austin Bransgrove is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Park Avenue Securities LLC (PAS) is an indirect, wholly-owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker-dealer offering investment products, as well as a registered investment adviser offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Please consult your tax, legal, or accounting professional regarding your individual circumstances. Wealth Advisory Group LLC is not a registered investment advisor. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. CA License #0L00236