Business Transition: Advisors, Selection, Conflicts

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This commentary discusses:

  1. The over thirty advisory disciplines it may be necessary to call upon when embarking upon and executing a successful business transition.
  2. The important difference between proactive and reactive advisors.
  3. What to look for when engaging advisors.
  4. Potential advisor conflicts of interest.

It is one that all business owners and their professional advisors may find particularly interesting – and perhaps more than a little controversial.


This commentary is based on over 40 years of active business valuation and transition practice across Canada and internationally. To paraphrase the trademarked U.S. Farmers (Insurance) Group Inc.’s business statement, when it comes to professional services in the context of business valuation and transition “I know a thing or two because I’ve seen a thing or two”.

The success of business strategizing, planning and execution – and hence on both business valuation and business transition – in no small part typically is a function of the selection of expert advisors across all business disciplines.

Business transition planning and execution advisory disciplines

The following table lists thirty-five ‘professional’ disciplines that over time may necessarily be called upon when strategizing and executing a business transition plan. This where business transition for any given business might in the end mean:

  1. an arm’s length sale of the business in its entirety.
  2. an arm’s length sale of all or part of one or more business units where the business is diversified.
  3. a generational transition of the business.
  4. a combination of business unit(s) sale and generational transition.

Those thirty-five advisory disciplines are highlighted as follows:

  1. Advisory activities are highlighted in grey where advisors largely play reactive roles. That is, they either work on problems their clients bring to them – e.g. a business value damage claim, or an executive search engagement – or they work on compliance engagements – e.g. a statutory audit.
  2. Advisory activities are highlighted in blue where advisors play both reactive and proactive roles. That is they work on problems brought to them, or suggest projects to potential clients – e.g. income tax or will planning strategies.
  3. Advisory activities are highlighted in pink are engagements typically generated proactively where potential projects, products and services are sold to business owners.

Advisor Types

Business Transition advisors: reactionary or pro-active?

With very few exceptions the ‘transition consultants’ I have talked with over the past several years come from and continue to be with a professional service firms that largely deal with their clients on a reactionary basis generated by their client’s perceived needs. This in contrast to dealing with their clients on a proactive basis in an attempt to contribute positively to their client’s business, business strategy, business value growth, and business transition strategy and execution.

What to look for when engaging advisors

Business owners, and for that matter business advisors ought to find the following comments and suggestions useful. They are not held out to be all-inclusive.

First, business owners need to clearly understand they are engaging individuals and will be receiving advice from those individuals. They should not fall into the trap of thinking large professional firms are something more than the individuals comprising them. Large firms may have advantages over smaller firms and individuals in areas such as data access and internal collaborative abilities. However, given current technology and geometrically expanding internet content means that much of the information available to large advisory firms is also available to individuals – be they business owners or individual or small firm professional advisors.

Second, when selecting advisors look for individuals who on meeting them:

  1. you think to be intelligent, well-balanced emotionally, and curious by nature.
  2. come across to you as being independent and objective.
  3. come across to you as persons who ‘speak truth to power’. That is, they appear to be persons who will tell you what they think you don’t want to hear where their views differ from yours? This is very important.
  4. come across to you as being open in telling you not only what they know, but what they don’t know and how they fill those voids.
  5. you intuitively think they are generally interested in you, your family, and your business – and more interested in those things than the fees you might pay them. This is very important.
  6. come across to you as believing that in our current economic and business environment the family business (the ‘goose that lays the golden eggs’ must be prioritized over individual business family member interests.
  7. confirm they have some ‘hands-on business operating experience over and above operating their own professional advisory firm. Such advisors are hard to find, so typically compromise is necessary.
  8. come across to you as having an overview working knowledge of globalization, central bank policies, government debt levels, ongoing technology advances, and public financial markets. This is increasingly important in our ever more complex economic and business environment.
  9. have relevant expertise and hands-on general business and industry-specific experience relevant to the engagement you are offering.
  10. appear not to overstate their expertise, experience, and interest in rendering advisory services to – as relevant – you, other owners of your business, other of your family members, your Board of Directors, and your management group. Consider that an advisor with an ego to be satisfied can be damaging to any process.
  11. are prepared to assist you in finding the best experts that are outside their own declared expertise, where those ‘best experts’ might well be found outside their own firm.
  12. are prepared to give you meaningful references to business owners they have consulted to. Make sure you follow up on those references and satisfy yourself with respect to them.
  13. ask them whether if you engage them they are paying a fixed-sum or contingent referral fee to someone else. If they are, consider the adage caveat emptor.
  14. beware of advisor who strikes you as overpromising.

Transition advisors: independence, objectivity and potential advisor conflicts of interest

Depending on profession and area of expertise professional advisors may or may not be members of a regulated professional body that has prescribed conflict of interest rules and guidelines. Regulated or not, in the end business owners who engage professionals need to ensure themselves each of their professional advisors is not conflicted in respect of the advisory activity for which they are being engaged. Of course, in some instances some business owners may (either individually or in tandem) look for professional advisors who are prepared to bend independence and objectivity principles to accommodate what those specific business owners may be working to accomplish. If an advisor seems prepared to do that, again consider caveat emptor.

Professional advisors in many of the categories set out in the previous charts may either be in conflict, or perceived by some stakeholders (e.g. shareholders, executives, bankers) to be in conflict. This in particular where professional advisors such as large accounting/consulting firms, commercial bank advisory groups, and investment bank advisory groups who offer business transition, business valuation and related advice are part of multi-faceted firms that have annual or ongoing retainers. In particular:

  1. Professional advisors may in other parts of their practices have annual retainers from the business of the business owners, or from the business owners in their individual capacities. The term ‘chinese wall’ is sometimes used to describe an information barrier within an organization erected to prevent exchanges or communication that could lead to conflicts of interest. Consider that chinese walls can be suspect.

Irrespective, depending on circumstances those firms inherently may be conflicted either because they:

  • have a real or perceived bias to favor one or more owners over others – those typically being the owner(s) who decide which professional firm to hire.
  • are not, or are perceived by some owners as not, being entirely independent and objective when giving advice.
  • Potentially may be negatively impacted by giving their best advice, and so may give advice that better suits their own purposes – e.g. may suggest only a generational transition strategy as contrasted to a strategy that encompasses planning for both arm’s length sale and generational transition.
  1. Some professional advisors may have a vested interest in a specific conclusion as a result being dependent on contingency fees. For example:
  • merger and acquisition advisors working on the closing a sale of all or part of a business.
  • life insurance advisors who look to assist business owners as part of a transition plan.
  • financial advisors looking to gain new investment funds to manage.It is important to recognize the possibility of ‘contingent fee advice bias’. At the same time recognize an advisor who is paid contingent fees can provide important transition and other advice.

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50 Hurdles: Business Transition Simplified

50 Hurdles Cover

The book 50 Hurdles: Business Transition Simplified, is available here at a price of Cdn$37 (including sales tax where applicable and free shipping). Read book testimonials here.

If you are an owner of a family business you might consider purchasing a copy for every member of your business family. If you are an advisor to business owners you might consider purchasing a copy for one or more of your clients. Discounts are available for multiple book purchases.

Ian R. Campbell FCPA FCBV

Ian R. Campbell is a Canadian business valuation and transition expert. He is the author of several Business Valuation texts and of 50 Hurdles: Business Transition Simplified. The Canadian Institute of Chartered Business Valuators recognizes his contribution to the Canadian Business Valuation Profession through the annual The Ian R. Campbell Research Initiative.

He writes The Business Transition and Valuation Review newsletter for business owners and their advisors.

You can reach him by email at, or by telephone at 905 274 0610.