Success as a Financial Advisor For Dummies

Chapter 23

Divvying Up Your Business: Equity Participation

IN THIS CHAPTER

Building equity in your business

Acting like the founder you are

Selling portions of the business to team members

Taking the emphasis off equity

After creating a business entity, you need to start thinking about whether and how you want to use the business to build wealth. As the business earns more and more money, you could simply pull that money out of the business in the form of higher salary and bonuses. Another option is to leave the money in the business to build equity value.

Like any business, publicly traded or privately held, your financial advisory firm can have equity value. Once determined, this equity value gives a genuine market value to your firm’s ownership units (whether LLC units or C-corporate stock shares). Ascribing value to these units enables exciting methods to keep your business operating beyond your own functional career, and even your lifetime.

In this chapter, I describe various ways that building equity in your firm creates opportunity to grow and to compensate key personnel ...