Exit Strategy for Grey Haired Brokers

by Charles (Bud) Callahan Mar/Apr 2020

What happens when it’s time to wind down your broker business and prepare for retirement? Bud Callahan walks through the steps to consider while making the decision and shares the wisdom he has learned from his exit journey.

Charles (Bud) Callahan, Jr., CLFP, BPB President & Founder, N ational Equipment Leasing
Charles (Bud) Callahan, Jr., CLFP, BPB President & Founder, National Equipment Leasing

What happens when it’s time to wind down your broker business and prepare for retirement? Bud Callahan walks through the steps to consider while making the decision and shares the wisdom he has learned from his exit journey. 

Many of my peers in the equipment leasing and finance broker world are approaching the age where we face several questions. Do we retire? Do we try to sell our businesses? Do we hire someone and try to pass it on as a legacy?

These are all important questions. While the right solution may be different for each broker, I will share what I learned on my journey through these steps to arrive at a decision that worked best for me.

This article is intended for those who are not quite ready to retire, but who are looking beyond their noses and planning ahead. Retirement age came a lot quicker than expected. It seems like yesterday when I was forming my company, and 42 years later, here I am.

Several factors will come into play during this planning process. Your answers to these questions can factor into your decision:

1. How is your health in general?

2. Do you have interests outside of your work environment that will keep you active, both physically and mentally?

3 Can you work for another person after being your own boss?

4. Does your spouse have health issues that require you to be at home?

5. Do you have children who can work in the business and carry on past your day-to-day involvement?

I’m going to back up and share my experience. If it resonates with you, hopefully it will help you move through the steps. I have been active in the AACFB and have a good relationship with my funding sources. Generally, I am respected in the industry, and hopefully so are you. About four years ago, I was approached by a local bank, an investor and a group that wanted an experienced person to start a captive leasing group for them. They offered me large dollar figures to launch this venture, but there were other things I had to consider. If faced with a similar offer, you must consider them too.

Industry Reputation

First, it’s important to consider how any move you make will affect your reputation, and how the new venture will affect your perception in the industry. In my case, the parties were interested in my relationships with funding sources and the trust that I built with them. How would this work if we formed a new group? How much influence would I have if I was not calling the shots? Was the payout worth comprising a lifetime of work? These are all questions you must consider thoroughly.

Health Concerns

How is your health? I had two bouts of cancer, the last being pancreatic, which was detected early. Today, I have been cancer free for more than three years. This fact spooked potential buyers who feared that I would drop dead before they had drained my brain of valuable information and transferred relationships. I was able to overcome this obstacle, but if you have health issues, be aware that they will factor into a selling situation.

Adjust Your Expectations

As a broker, be aware that any offerings to buy your business will not be in the millions, so don’t become dazzled with expectations of striking it rich. You will be expected to stay on at least two years to keep relationships alive and for others to gain the trust of your funders. Then you can fade into the sunset, which may work for you.

Consider the Location

Selling your business may require you to move to a new location, and if you are in a home office that will be an adjustment. The culture of the new owner is something you must consider, so take the time to get to know them and see how you get along. You really don’t want a culture that makes you dread going to work every morning.

Enlisting the Kids

Do you have children who are young adults with the sales talent to carry on the business in a profitable manner? Do they have the same dedication to the business that you have? Some greats from our industry, such as Charlie Bancroft and Sonny Monosson, have successfully passed on their business to the next generation. But your children may lack the talent to be a leasing and financing broker, or they may have no interest in the business. Be sure to examine their specific talents without parental prejudice and objectively assess if they can properly maintain the business that you have invested a lifetime to maintain.

Your Spouse’s Health 

My spouse has macular degeneration and is compromised because of her eyesight. She has lost her driver’s license and is dependent on me or Uber to get around. So I decided to stay at home with her. We have our Social Security, her pension and my income from doing what I know. Although I am not knocking on doors, my income is still fine.

I encourage you to consider that life is not all about money. Yes, we need it, but it can’t buy you a retirement that will work for you. So, closely consider your options before health or other circumstances force you to decide. I wish you all good health. Feel free to call me if you have further questions.

Leave a comment