With more than 150 years of combined experience, the Yellow Cardinal Merger & Acquisition Advisory Services team is uniquely qualified to work with business owners and potential buyers. Pictured are team members (back row, from left) Keith Warner, Stephen Ford and Roger Furrer; and (front row) Katrina Horton and Cliff Bishop.
With more than 150 years of combined experience, the Yellow Cardinal Merger & Acquisition Advisory Services team is uniquely qualified to work with business owners and potential buyers. Pictured are team members (back row, from left) Keith Warner, Stephen Ford and Roger Furrer; and (front row) Katrina Horton and Cliff Bishop.Photography provided by First Financial Bank

First Financial Bank: Do You Have A Business Succession Plan?

First Financial Bank’s new Yellow Cardinal Merger & Acquisition Advisory Services offer a variety of innovative solutions for business leaders considering a sale or transition. They’re worth learning about, even if you’re not planning to sell anytime soon.

“Yellow Cardinal Advisory Group, a First Financial company, is a boutique wealth management firm that has a long history of assisting clients with their personal financial needs,” says Greg Harris, President, Yellow Cardinal Advisory Group & Private Bank. “Now, our Business Succession and Mergers & Acquisitions services allow our team to serve the needs of the business owners throughout the lifespan of their business.”

The Yellow Cardinal team offers investment banking guidance to middle-market companies. The team’s extensive industry knowledge and vast expertise in assisting clients through the intricate journey of selling their businesses — now accessible under the First Financial umbrella — are all part of First Financial Bank’s comprehensive consulting approach.

“When preparing for an exit, we help owners understand all of the exit options and the nuances of each, from both a business and personal wealth perspective,” explains Karina Horton, Director of Business Succession Planning. Those options, she says, might include the transition of the business to family, a management buyout, an employee stock ownership plan (ESOP), or the sale of the business. If a client decides to sell their business, Horton partners with her teammates, including Cliff Bishop, Executive Managing Director for Yellow Cardinal Merger & Acquisition Services.

Yellow Cardinal brings more than 150 years of combined experience in working with business owners and potential buyers. “We have invaluable contacts, a variety of potential buyers including private equity groups, public companies, strategic buyers and international buyers,” says Bishop. “Our databases and direct relationships allow us access to potential buyers that the owner of a business would not otherwise enjoy.”

According to Bishop, middle-market businesses are becoming more attractive to large buyers, including private equity groups. In the past, these groups were only interested in companies with incomes of over $10 million; however, that trend has changed. Buyers are now willing to acquire companies with incomes of $1 million or less, provided they fit into existing holdings and have good growth potential. On the flip side, the level of due diligence required to get a transaction closed has significantly increased.

An exit plan’s value

Horton points out that Yellow Cardinal knows that business owners don’t always think they need to plan or prepare for an exit, or at minimum, they don’t realize the value in doing so.

“They don’t know that planning ahead may not only yield a greater potential value upon exit, but also save them tax dollars, put more money into their family’s and/or charitable organization’s pockets and offer a much less stressful experience,” she says.

“Many owners aren’t prepared for the massive distraction that an exit will have on running a business nor the burden that experience will bring, especially if unprepared. They also don’t realize that many of the most impactful things will take time and the expertise of many professional advisors, including attorneys, accountants, wealth planners, wealth advisors and investment bankers. For some, that list might also include lenders, real estate agents and a qualified intermediary if they are considering things like a 1031 exchange.”

In Horton’s opinion, the biggest tragedy of all is watching a successful business close its doors because an unexpected event forced the owner to walk away due to a lack of time or planning.

“An exit plan doesn’t only pertain to a business,” she says. “A successful exit plan is not done in a vacuum. It will certainly affect your business, of course, but it will have a ripple effect on your employees, your key managers, your community and, most certainly, on the owner and their family. Owners may be surprised by the significant effects of different exit strategies on others.

“Business owners may choose their exit strategy based on what others have done,” Horton adds. For example, they might know someone who sold their business or another company that implemented an employee stock ownership plan (ESOP). Assuming that these strategies worked for others, they will choose the same. However, this assumption is only sometimes accurate, and many owners are surprised to learn that there are multiple options to choose from, and each one works differently.

Bottom line: it’s never too early to start considering your business succession options.

Committed to upholding legacies

Yellow Cardinal associates place a premium on creating plans for clients to uphold their legacies as they transition out of their businesses. They take pride in helping their clients take control of their business succession or exit plans with intention and purpose.

Horton says she entered the financial consulting industry to uphold a friend’s legacy. “His contribution to helping business owners was significant, and I wanted to keep that alive,” she says. “A business owner is a special kind of person. As a good friend of mine once said, ‘People mistake business owners as having a greater appetite for risk when the reality is, they simply have more self-confidence.’ They believe in their business’s contribution to society and their ability to drive future success.

“That kind of conviction is invigorating and contagious,” Horton continues. “Owners are passionate people, and they also tend to give back to their local communities in meaningful ways. I wanted to support business owners by recognizing their success and rewarding their commitment to their communities and employees.”

Compare multiple options

According to Bishop, Yellow Cardinal Merger & Acquisition Services exists to educate clients on the many options one should consider in succession planning. “We want every owner to understand the differences in the pros, cons, math and process of each option to know which ones make sense and which don’t,” he explains. “We want owners to make an intentional choice about which option best suits their companies, themselves and their families, versus defaulting to an exit plan because it’s the only one they know about. To make informed decisions and avoid vulnerability to unexpected events — such as unsolicited offers, life events and an ever-changing environment — it’s crucial to understand the mechanics and numbers behind each option. This may involve comparing multiple options to determine the best course of action.”

Bishop cautions business owners who question the importance of examining all transition options before making a final decision. “Not fully understanding the personal financial impact of an exit can be a costly oversight,” he says.

It’s essential to understand if the value of a decision is enough to meet your long-term retirement and legacy goals and to make sure that the timeline matches up. One should also consider other obligations, such as benefits and tax-advantage strategies — including charitable ones — available to you before an exit. These are all critical considerations, Bishop notes.

“Additionally, we want owners to be prepared for the unexpected as much as possible,” he emphasizes. “While planning ahead is a wonderful thing, life doesn’t always go according to our plans. By discussing things like buy, sell and/or operating agreements, in tandem with wills and trusts to ensure they properly align and meet the expectations of the owners and their families, we can avoid awkward and expensive mistakes.”

Every day, Bishop and the Yellow Cardinal Merger & Acquisition team are eager to discuss and educate business owners throughout the region — especially now, as part of the First Financial team.

“A solid succession plan means that a good business will continue beyond the lifetime of just one generation and will keep all the positive contributions it brings well into the future,” he says. “I find it personally rewarding to be a part of that.”

Visit Yellowcardinalmanda.com to learn more about First Financial Bank and Yellow Cardinal Merger & Acquisition Advisory Services. Contact Katrina Horton at katrina.horton@yellowcardinaladvisors.com or call 513-979-5798.

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