Any opinions on CEPA and Exit Planning Institute?

[DHK]

Probably a remote question to ask here, but I thought I'd ask.

I just attended a new chapter launch for the Exit Planning Institute in my area. I find it intriguing. A uniformed process for multi-disciplined practitioners to work together to help a business owner enhance their current business and get maximum value when they sell/exit their business.

Just curious if anyone else has participated in the CEPA education program and their local association.

 

[PrivClientSG]

Here is some additional resource/information:

https://my.exitplanningexchange.com/exit-planning-certification-alternatives

 

[scagnt83]

I know advisors who have the CExP designation. Ive only heard positive things about it. Im currently working an exit planning case with someone who has the designation.

The whole process is a very long sales/advisory process. Lots of ins/outs.

TBH, Im not really sure if the money is worth it to work that market. You get some really large premiums. But the time spent on the case is a lot longer than normal business cases.

A NQDC case can land you just as much money, and takes half the time from start to finish.

However, obviously, the NQDC case can be a part of the exit plan, or it can be the catalyst for the exit plan process.

So it is probably short sighted to work the NQDC market and not be in exit planning.

 

[DHK]

I know advisors who have the CExP designation. Ive only heard positive things about it. Im currently working an exit planning case with someone who has the designation.

The whole process is a very long sales/advisory process. Lots of ins/outs.

TBH, Im not really sure if the money is worth it to work that market. You get some really large premiums. But the time spent on the case is a lot longer than normal business cases.

A NQDC case can land you just as much money, and takes half the time from start to finish.

However, obviously, the NQDC case can be a part of the exit plan, or it can be the catalyst for the exit plan process.

So it is probably short sighted to work the NQDC market and not be in exit planning.

Agreed. I can certainly see that. If I were to really do all the processes involved, I would certainly at least be charging fees for it.

I suppose the part I find unique is that there's a common methodology, so it's easier to communicate with other like-minded professionals and do "your thing" yet integrate it in the common processes.

I certainly want to do NQDC. I'll integrate that value proposition with the Capital Equivalent Value. I'm also tight with some guys that do pre-leveraged contributory ESOPs, so there's case splitting opportunities there as well where that can apply.

As far as cost, right now there are no live training events, so it's only online. They're offering a $900 discount so it's only $2,300 for training through the end of the year. I'm just so busy that I can't see myself getting to it this year... but perhaps next year.

It certainly has me thinking.

Thanks.

 

[scagnt83]

Agreed. I can certainly see that. If I were to really do all the processes involved, I would certainly at least be charging fees for it.

I suppose the part I find unique is that there's a common methodology, so it's easier to communicate with other like-minded professionals and do "your thing" yet integrate it in the common processes.

I certainly want to do NQDC. I'll integrate that value proposition with the Capital Equivalent Value. I'm also tight with some guys that do pre-leveraged contributory ESOPs, so there's case splitting opportunities there as well where that can apply.

As far as cost, right now there are no live training events, so it's only online. They're offering a $900 discount so it's only $2,300 for training through the end of the year. I'm just so busy that I can't see myself getting to it this year... but perhaps next year.

It certainly has me thinking.

Thanks.

Yes, most charge a fee. Its just hard sometimes to charge fees high enough to justify the time spent. But its all situation specific.

But think about going into a closely held business, and telling them they need to divert $200k a year to fund this transfer... on top of paying you $20k in fees.

Because there is no guarantee that they utilize you for the funding of the deal. Or that they choose a funding method that could involve you.

You can put contingencies on it, or have a discount rate if they do utilize you for the funding or protection side of it. But its still a large nut for a closely held company. And you do not want to scare them off with too much of an outlay. So it must be balanced carefully.

---

NQDC almost always plays a role to some extent.

For an Outside Transfer, Key Employees must be locked up in order to maximize the business value. At minimum, they need LI/DI protection in place on them.

For an Inside Transfer, Key Employees are often next in line to become partners. The NQDC often serves as a funding vehicle to buyout the exiting partner. Even if thats not the case, they still need to be locked up in order to protect business revenue.

ESOPs can be utilized for inside transfers as well. Just a lot more red tape.

The biggest issue with the market, imo, is that owners do not take it seriously until its way too late. 8-10 years is optimal imo. Most wait until 3-5 years to do anything.

Even other professionals do not realize how long is really needed to fund an internal buyout in the most efficient way possible. Ive had lawyers say 3 years is plenty.... but they are not recommending the lowest tax solution possible. They just recommend financing and getting it done as fast as possible.

But you can discount shares, and provide alternative compensation to make up for it via internal funding, and suddenly it saves the business money, which provides more security to the exiting partner that they will get paid as promised.

Lots of value is added from NQDC to the exit plan.

Key Employee Retention Plans alone are often gauged at an avg 20% increase in the firms value.