Recently a good producer by the name of Brock Jolly came to me for help with a group of Podiatrists he works with. Brock’s primary company is Mass Mutual, but Brock shops every case for his clients to find the best fit. His clients all had personal disability insurance and were now looking to insure their business. More specifically, they wanted to fund the buy-sell agreement their attorney had recently drafted for them.
The four partners all had equal ownership interest in the business. When Brock approached me about the case my first questions were “how much are they looking to insure the business for” and “what is the business worth”? They did not know the answer. Without some idea of what the business is worth, I was unable to prepare options for them and Brock was also unable to prepare options on the life insurance side which they also requested from him.
At that point I told Brock about the Business Valuation that Principal offers at no cost to the client. He loved the idea and his clients loved that they would not have to spend the $5,000 to $10,000 that accountants typically charge for such a valuation. Although this process may not meet all the needs that arise when seeking a business valuation, it more than served the purpose of helping these clients decide on how much coverage they needed.
I had Brock collect the last three years of business returns, a current balance sheet, and a profit and loss statement and sent them to Patti at Principal Life. Patti is a CPA and a terrific resource for valuing small businesses. She is very knowledgeable and provides an excellent product. The process took about 3 weeks. The end result was a first class, very professional report. Principal valued the business five different ways to give them some options. The clients were thrilled with the report and of course loved the cost. They purchased both life and disability insurance policies to fund the liability created by their buy-sell agreement.
At DIBroker/Eskra & Associates we handle cases like these every month if not more. To date the clients have always been satisfied with the valuation report. Sometimes they go forward with insuring themselves and sometimes they buy policies to cover the risk, but they always leave happy….