Shownotes
Business succession planning is critical for every business owner, regardless of when they plan to exit. In this episode of Metcalf Money Moment, hosts Jeb, Ethan, and Eric sit down with attorney Jeff Coppaken to discuss the mergers and acquisitions landscape and the essentials of exit strategy. Jeff reveals that the best time to start business succession planning is always now—whether you're planning to sell in six months or six years. He explains common pitfalls in selling a business, the importance of having clean financials, and when to start the business succession planning process. Learn about deal structures, seller financing, and why assembling the right team of advisors early can maximize your business value and minimize tax implications when it's time to exit.
What you will Learn in this Episode:
✅ Discover why business succession planning should start immediately, whether you're exiting in six months or six years, and learn which key advisors—including your business attorney, wealth management team, and tax strategy experts—need to be part of your planning process from day one.
✅ Understand the critical role of the due diligence process and clean financials in maximizing your purchase price, plus learn how business valuation works and why removing lifestyle expenses from your books is essential before bringing your company to market.
✅ Explore various deal structures, including seller financing, seller notes, and SBA loans, and discover how internal succession plans can create win-win scenarios that protect both buyer and seller while ensuring business continuity.
Tune into the Metcalf Money Moment podcast for expert insights on wealth management and retirement planning! Join Jeb, Ethan, and Eric for practical Estate Planning strategies that you can implement to unlock financial clarity and confidence. Listen now to inspire your financial journey!
TIMESTAMPS:
00:00 When to start business succession planning, including business attorney, wealth management, and tax strategy advisors
06:51 Finding the right buyer through business brokers and ensuring culture fit in mergers and acquisitions
09:32 Pitfalls, including messy financials and owner benefits that negatively impact business valuation and purchase price
13:32 Deal structures explained: seller financing, SBA loans, seller notes, and why internal succession deals often include higher seller carryback percentages
18:30 Typical transaction timelines for selling a business range from six to nine months
KEY TAKEAWAYS:
💎 The best time to begin business succession planning is always now. Assemble your advisory team—tax strategy expert, wealth management advisor, and business attorney—to maximize value and minimize tax implications, whether you exit in 6 months or 6 years.
💎 Clean financials are crucial for selling a business at top dollar. So, remove excessive owner benefits from your books. Don't compare a fixer-upper to a renovated property when setting business valuation expectations.
💎 Internal succession deals often involve more seller financing due to established trust. Creative structures can include consulting arrangements and earn-outs, while proper collateral protects the seller's investment throughout the transaction.
ABOUT THE GUEST:
Jeff Coppaken, the founder of the Coppaken Law Firm, is a lifelong resident of Kansas City. Before becoming an attorney, Jeff spent almost a decade in sales, marketing, and customer service, which helped him understand unique aspects of the business model. His customer base includes closely held businesses, family offices, entrepreneurs, real estate investors, and developers, and is industry-agnostic. Jeff often assists his clients with buying or selling a business, ongoing business legal needs, and real estate transactions.
DISCLAIMER:
This information is not intended to be a substitute for specific individualized tax or legal advice. We recommend discussing your particular situation with a qualified tax or legal advisor. Jeff Coppaken, and Coppaken Law Firm is not affiliated with or endorsed by LPL Financial and Metcalf Partners Wealth Management.
RESOURCES MENTIONED:
Transcripts
Jeff Coppaken: What a terrible answer I'm about to give you. It's always the right time to start that process and so if, if you plan on exiting in six months and you haven't started it, you gotta [00:00:30] start the process right now. If you plan on exiting in six years, you should have a strategic plan in place, and in my opinion, that involves your tax advisor, your wealth manager, and your business attorney.[00:00:45]
nd Eric Wymore. Each episode [:Now your hosts[00:01:15]
Jeb Graham: welcome to Metcalf Money Moments podcast. My name is Jeb Graham here with. Eric Wymore and Ethan Husson. How you guys doing? Doing good.
Eric Wymore: Doing well? Yep.
pecial guest today. Uh, Jeff [:Jeff Coppaken: I'm doing great.
Thanks for having me this morning.
t there, and it's a good day [:Jeff Coppaken: Yeah, absolutely. It's a, a really interesting time, uh, in the m and a market. It's, uh, you know, we're coming off of a, uh, month plus government shutdown, and so a lot of transactions [00:02:15] that were relying on SPA loans have been really hit on pause. Whether that was the process of even, you know, potential, uh, buyers talking to sellers, you know, drafting Lois this time of year for small business is a [00:02:30] really busy time for, uh, m and a work.
s also this kind of catch up [:And, and a lot of that on the small business side has to do with succession planning. And we have [00:03:00] a generation of, um, boomers who are kind of coming to that time where, you know, it's, they've been putting off retirement or the offer, um, you know, they're waiting for the right offer to come through. And there's not a lot of businesses for sale.
[:And [00:03:45] so in that range, we see individuals, you know, they're, they're. Business owners who want to connect with the business buyer. And it is just an interesting process of making sure there's a personality fit as well,
Ethan Hutcheson: speaking. [:As someone who, who like is wanting to sell a business, when would you recommend having that [00:04:15] conversation? Who do you loop in? How do you even start that, that process? Because I, from my understanding, it can, it can be, you know, a six months process or a six year process, depending on complexity. So when is a good time to start and think about that conversation?`
ff Coppaken: What a terrible [:And your business attorney. And I think having that team in place helps you to set your goal and helps you to understand, you know, what [00:05:00] am I potentially gonna sell my business for? How do I avoid, um, pitfalls? What can I do from a tax strategy to make sure that I'm maximizing, um, the sale and paying only the amount of [00:05:15] taxes that I have to, and do I.
time is always right. If you [:To take off and you know, there's. You want to sell your business for as much money as possible, but if you're not showing a lot of profit, the buyer comes in, they're gonna multiply the ebitda, or they're gonna use a very similar type of [00:06:00] equation. And if you don't have the numbers that support a high purchase price, it's difficult to sell it.
sold a house at some point, [:You have [00:06:30] to pull comps of the house that is as close to yours. People, as soon as I say that, they seem to get it. But with businesses, they talk about potential and they talk about, you know, well I did all these things over the years and they made it a better lifestyle for me. [00:06:45] But unfortunately, lifestyle doesn't translate to purchase price.
iness owners have profitable [:We've gotta figure this out. And obviously, are you able [00:07:15] to talk a little bit about the process of somebody that does not have an internal succession plan? You know, whether that's, you know, going to market through a business broker or, or that sort of thing. Have you handled some transactions like that and can you talk about, speak to that at all?
Jeff Coppaken: [:And so I've seen clients have great relationships with the brokers, have really great experiences with the brokers. [00:08:00] And I've seen unfortunately, you know, buyers and sellers who've had bad experience with brokers. And as far as internal succession, what. I think is most important. If the fit isn't right, it's okay to say no.
It's [:And then there are other sellers who are like, I need the right buyer. I need to know that my employees and my customers are gonna be handled as close to the way as I've handled them in the past. And when that's the process, it's kind of like dating. [00:08:45] You gotta find the right buyer. You gotta take the time to get to know them and need to make sure that there is a culture fit.
really can't be made, in my [:You know, it's easy to say, I want [00:09:15] the highest purchase price, but if that's not actually the most important thing to you, then be honest, open lines of communication are the best way to avoid those pitfalls in the future.
you've mentioned pitfalls a [:You know, what is the process to kind of clean up those pitfalls? Maybe even on a timeline, you know, timeline process. Um, what are things that people can just avoid, [00:09:45] uh, or makes it easier to avoid? Um, so they don't have to spend the extra, extra time cleaning them up.
hat I see the most as far as [:And I say, [00:10:15] you know, you've been making widgets for 50 years. I couldn't make a widget if you, you know, gave me a year to figure it out. Don't apologize that due diligence is something that you're not familiar with. But what happens is, is a lot of [00:10:30] times you maybe have a, a buyer who's bought and sold multiple businesses.
t, and so they may have more [:And, and you know, I should even rewind, sometimes it [00:11:00] happens with a, a lender. You know, when you're using an institutional lender and the buyer is answering to a bank and the seller says, well, why do they need this? Why do they need that? I try to tell 'em, think of it as there's a list and there's a bunch of boxes that need [00:11:15] to get checked.
es and, and that's something [:[00:11:45] And so I think it's just having, you know, really good advisors in place so that way your attorney can tell you, Hey, this isn't. This isn't because they need to get into your business, you know, more than is necessary. And so they need to get into your business as much [00:12:00] as they would for any transaction because that person has a job and their job is to check those boxes.
receipts or proof of funds. [:If we're running a race and we're running hurdles, you gotta jump over 'em, right.
[:Jeff Coppaken: Absolutely. Yeah. And, and the, a lot of sellers fatigue and sometimes even buyer fatigue, you know, if they're working with a lender, um, you know, institutional lenders, sometimes the, the buyer says.
Hey, I don't care [:Jeb Graham: Nice. So, so Jeff. To this. I, I think we just kind of went [00:13:30] through a few different deal structures to a degree, but can you talk a little bit about the most, like when you're talking about an internal succession, what is the most common deal structure that you're seeing? Do you see, you know, people usually go get a loan and paid upfront, or are you seeing, uh, [00:13:45] multiple year earnouts?
Is it kind of all, all the above? Or what, what's the most common? Yeah,
ee more seller notes than we [:And so the buyer is, has a [00:14:15] longstanding relationship with the seller. There's a trust factor that's in place, and because of that, the seller is acting as the bank and they're able to get interest on it, but it's an interest rate that's lower than the lenders are willing to [00:14:30] offer the buyer. And so I would say that.
day, most sellers want cash [:And so there will, even though there's a large chunk being paid up front, maybe [00:15:00] 80%, there could be a seller, you know, uh, carryback note. And it can be structured, you know, straightforward. Hey, you know, we're lending the buyer, uh, half a million dollars and we're gonna do it at, you know, six and a half percent interest payable, [00:15:15] um, subordinate to the SBA and over X amount of years.
o consult and offer services [:Instead of me giving you half a million dollars, you may earn up to [00:15:45] 750,000, a million dollars, whatever the case is. I, as an attorney, always love win-win scenarios. Mm-hmm. And so if there is a situation where the seller can assist the buyer for growth. To me. That's fantastic.
Jeb Graham: Mm-hmm. [:Like when you're, when you're, when they're carrying the note to do, to protect themselves, to make sure that they get paid, whether that's collateralizing the business or are there other things that they would do, um, to protect themselves in that [00:16:15] circumstance?
Jeff Coppaken: Yeah, absolutely. So when I'm working with the seller, uh, we definitely wanna make sure that they have some sort of secured interest in the business, in the person, in the assets.
it's going to depend on the [:Um, there's, you know, other forms of collateral. I've seen a classic car used as collateral before on a business transaction, and [00:17:00] so the answer is. Yes, we want to, you know, protect the seller as much as possible. And then there's also, you know, we'll draft the documents in a way that if, you know, payments are missed, then it triggers X, Y, or Z.
[:Um, but certainly we try to avoid that. That is really a last, [00:17:45] um, last scenario that we, we look at.
Ethan Hutcheson: Kinda like the Dave Portnoy buying Barstow back for a dollar type of thing.
Jeff Coppaken: Exactly, exactly. That, that was a deal that IS uh, I believe has worked out very well for him.
Hutcheson: I think so. Yeah. [:Jeff Coppaken: Yeah. He's still eating pizza all the time, but now he gets to, uh, travel on his, you know, second and third jet.
Jeb Graham: Yeah. It seems like a lot of things have worked out really good for him, doesn't it? Yeah. Yes
s probably a whole different [:Ethan Hutcheson: probably. Yeah, I, I've got one last question just outta curiosity. Uh, for, for me, Jeff, how, how long are your engagements when you're, like, how is, how long is the average sale take?
ken: Yeah. So, uh, you know, [:That's okay, right? If, if you need a good business attorney and you're at that process, I rarely will tell you no. But the typical engagement is gonna be something closer to six to nine [00:19:00] months. Okay? And so my preference is that I'm brought in pre LOI, because it gives us an opportunity to discuss what's important to you.
ked on deals that, you know. [:They lost a key customer. They go replace that [00:19:30] key customer. Um, there were, you know, maybe bloated salaries and they figure out ways to cut or maybe they didn't have the proper. Executive team in place, and they actually have to spend more money to get the executive team in place. And so some of those, some of those [00:19:45] transactions can stem for years.
e worked as general counsel. [:I have a, you know. I kind of feel as if I'm part of the team and they're gonna hear, alright, [00:20:15] we, and, and you know, we're gonna do this. And I always remind them, I know it's you, I know it's you. But I like to feel that as a team, that we're really looking at everything as a we, because it just gives me an ability to implement.
Um, you know, the, the [:Jeb Graham: Well, very good. Well, Jeff, uh, I know we're coming up on a little over 20 minutes and so, uh, wanna, first of all, thank you. It's been a pleasure to have you on. I think this was super good information specifically for our [00:20:45] clients that are either young business owners or boomers that are actually getting ready to retire in the near term.
always used to joke, uh, you [:And everyone would say Today or yesterday. You know what I mean? But I feel like that's the same thing, right? With, uh, with when you're gonna sell your business because, um, you know, starting that internal succession plan, and even if you [00:21:15] decide, and I, I think you could probably attest to this, even if you decide to sell it to private equity, right?
iness after you're gone. So, [:Voiceover: Thanks for tuning in to Metcalf Money Moment, the podcast. We hope today's episode provided valuable insights to help you unlock financial clarity, confidence, and peace of mind. For more expert advice and resources, visit metcalf [00:22:00] partners.com. Until next time, make every money moment count.
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