Navigating a business exit can feel like flying into a storm with no landing strip in sight—especially when millions are on the line and expert advice is scattered. What’s the secret to engineering a “clean exit” that safeguards both your wealth and your legacy?
In this episode, Joe LoPresti, Founder of Arlington Wealth Management, reveals the game-changing strategies behind holistic wealth management for business owners on the cusp of a major business sale—and why the fractional family office approach is rewriting the rules for lower middle market entrepreneurs.
You’ll discover…
- Why most business owner advisors work in silos—and how this creates dangerous planning gaps you might not see coming.
- The #1 mistake founders make when exiting their business, and how proactive planning turns risk into opportunity.
- A behind-the-scenes look at “fractional family offices,” and how they unite specialists for life-changing results.
- The overlooked power of sell-side advisory and new insurance tools that can protect—and even boost—your post-sale windfall.
- The untold story of how Arlington Wealth Management partners with business owners from the “20-yard line” all the way to the end zone.
NOTE: Arlington Wealth Management is a Registered Investment Adviser (“RIA”). Registration as an investment adviser does not imply a certain level of skill or training. All investments carry risk, and no investment strategy can guarantee a profit or protect from loss of capital.
Mentioned in this episode:
Transcript
Patrick Stroth: Hello there. I’m Patrick Stroth, trusted authority in executive and transactional liability and national practice leader for Liberty Company Insurance Brokers. Welcome to M&A Masters, where I speak with the leading experts in mergers and acquisitions, and we’re all about one thing here. That’s a clean exit for owners, founders, and their investors. Today, I’m joined by Joe LoPresti, founder of Arlington Wealth Management.
Joe drives the firm’s initiatives to ensure that it does all it can to help successful business owners and their families achieve their essential life goals. His career, spanning over 38 years, focuses on a consultative wealth management process designed to help improve Arlington’s clients and their family’s wealth and happiness. Joe, it is great to have you here. Particularly in this day and age, wealth management is at top of mind with a lot of things given economic turbulence out there, which is temporary, but it’s great to get your input. So, thanks for joining me today.
Joseph LoPresti: Yeah, absolutely. Thanks for having me, Patrick.
Patrick: Now, Joe, before we get into Arlington Wealth Management, let’s start with you. What brought you to this point in your career?
Joseph: Well, I’ve been in the wealth management industry for 40 years now, and early on in the early years, I worked for some of the bigger banking brokerage firms, and that’s where I cut my teeth. Pretty quickly realized that that culture, which was mostly a sales-oriented culture, wasn’t my thing. Didn’t resonate well with me.
So after some time, I started to transition to becoming independent and kind of carving my own path in developing investment models. We have a proprietary investment model and indicators that we design to help provide a framework for our decisions when managing client assets. And over time, as our clients became wealthier, we realized they needed more than just investment advice. They needed advice that extended beyond investments in the tax area, wealth transfer planning, asset protection, and other areas.
So we added more advanced planning and became more of a comprehensive wealth management company. And we really formulated that into a fractional family office more recently, where we coordinate the business strategy and personal wealth planning for business owners into a unified approach to help them achieve their life goals.
Patrick: Yeah, I think the concept of wealth management has expanded over the last 50 years. Because when you used to think about wealth management, it was people who had worked for companies, either through inheritance or they worked with major, major companies, worked their way up the corporate ladder after 50 years, and then we’re looking for retirement.
Now you’ve got business owners and founders out there and people who can accelerate their wealth very, very quickly. So let’s go into Arlington Wealth Management and let’s talk about that because, well, how’d you name it? Because it’s not called LoPresti Wealth Management,
Joseph: No, well, it’s more than just me, so that there’s that. I’m not going to say there was too much thought put into it. We work in Arlington Heights, Illinois. That’s the village where my company’s office is. So we named it Arlington Wealth Management.
Patrick: Okay. And then with our show, we deal with thought leaders that are in and around the lower middle market. And you mentioned you’ve been in this for 40 years. You are definitely not going way up market to the ultra, super high-wealth billionaire market.
You’ve managed to stay down in the lower middle market. Let’s talk about that. And your focus there, give us kind of a profile with your client size, and then talk about what Arlington Wealth brings to the lower middle market, particularly for owners and founders.
Joseph: Yeah. So we work with business owners that are generally in the five to $75 million range. And we feel that that is a segment of the market that is somewhat forgotten in the sense that the ultra-high net worth business owners have a lot of great resources, a lot of high-level advisory opportunities, and teams that work in coordination. Whereas the smaller to medium sized business owner tends to work with advisors in what I call a silo.
Where they have an accountant or a financial advisor or an attorney, or any other advisor. Insurance, business advisors, et cetera, but they’re not working with a team as much as they are individual advisors. And there’s very little crossover in those professional silos. In other words, the account and financial advisor rarely communicate with each other, and that creates gaps in planning and missed opportunities.
Patrick: Yeah, I could just see misalignment there. And that’s a focus when people are talking about now the awareness of health, and they’re talking about more holistic, broader approaches, not going to one specialist for one thing, or one expert for another, but getting a whole feel. Give us an example or two, and let’s talk about a business owner who is looking at an exit of $20 million, let’s say. If they came to Arlington Wealth, what are you doing in that approach? Walk through the process for us.
Joseph: Well, there are business owners of all shapes and sizes, of course. If they’re in that 20 million range, and I’m assuming you’re talking they’re more thinking about the end game at this point, right? So with with a business owner like that, what we really want to do is we want to think about not just their business in isolation, and not just their personal wealth planning in isolation.
We want to coordinate the planning on both levels to secure their freedom and maximize their potential. So on the business side of planning, we’re going to want to know what the value of their business is. We’re going to want to determine that valuation and look at the range of values in their industry and show them where the best companies in the industry where they’re valued.
Do an assessment on their business, and show them where they’re likely to be valued in the marketplace, in the eyes of a buyer today. And not always, but most times, that exposes a gap. And then work with them on in making improvements in their business to get to best in class, and that gets them a higher multiple on the business sale.
Patrick: And one of the things that struck me when we spoke a while ago is a few years back, I saw a major investment banking firm that was helping a couple of founders who set up an automated phone system, and they were selling it for quite a bit of money. $80 million, something like that. And they went through the process, and the transaction happened. And then the founders were talking about, yeah, we got a real big tax hit because we didn’t file this certain thing with their shares a certain way to maximize tax efficiency.
And I looked at the investment bankers who had quarterbacked the deal, and I thought, why didn’t you guys advise them on the tax consequences, or at least steer them somewhere? And they just said, well, that’s getting too personal. We can’t, that’s not in our lane. We don’t do that.
We’re just gonna kind of go forward.
And I thought that’s fairly short-sighted in that, you know, tax impact, particularly on, you know, eight-figure deal, you’d at least try to recommend that you pointed them somewhere. Talk about that relationship when you’ve seen with investment bankers or other professionals, where they kind of stay fragmented, and how it’s so easy just bringing a more holistic approach to this.
Joseph: You’re absolutely right. And that’s what I see is that void in the advisory industry for the small, the mid-size business owner, in the sense that, and the siloed approach that I was talking about earlier, where one advisor doesn’t want to cross out of their lane to the other advisor. And it’s not necessarily about having to be an expert in all these areas, but it’s bringing the right experts to the table and having those advisors discussing the owner and the owner’s agenda in a collaborative environment, and not discussing their own agenda.
So I like to ask business owners, hey, when’s the last time your key advisor, your attorney, your accountant, financial advisor, whoever it is, when’s the last time they all sat around a table discussing you and your agenda and where you’re going, where you are now, where you’re going, and then developing and guiding holistic, comprehensive plans that are going to get you to where you want to be.
And I usually get that blank stare coming back, saying, like that’s never happened, you know. And so that’s what our fractional family office is designed to do, is to get all the advisors sitting around a table, talking about them, and developing synergistic strategies that can provide peace of mind and eliminate gaps, eliminate dangers that are exposed in that siloed planning and capitalize on opportunities that are often missed in the siloed planning.
Patrick: And I would think at this level of professionals, they, particularly in your network of professionals, there’s not a fear of conflict. You know, the attorney isn’t going to try to take over some of the tax work. The CPA isn’t going to try to take over other investment ideas and so forth. I mean, you’re bringing people in to complement each other, not to step on toes and so forth.
Joseph: Well, not only are we bringing people in to complement each other, but we’re bringing people in that are actually operating in the same model. So we have 70 plus professionals and different specialists in different areas that are used to operating in an environment that is collaborative and working with other advisors, clients, where I may have been the lead relationship manager.
So I call myself the personal Chief Financial Officer for the business owner. I’m not their company’s financial officer. I’m there. I’m advocating for them. And to do that, we really have to run on two tracks. We have to run on the business strategy track, and we have to run on the personal wealth planning track, and then bringing in professionals who are used to operating in that type of environment.
Because oftentimes there’s egos involved amongst professionals and control, and this type of framework is different, where it eliminates that and really brings the professionals to the table to provide fiduciary-level recommendations and solutions for the business owner,
Patrick: And I can imagine now how things have evolved, because now I mentioned earlier, we’ve got business owners, and with your practice, people are just coming to you saying, well, here’s our bank accounts, here’s our investments, so forth. You now have business owners that are at a transition space, and so they’re coming to you, probably they weren’t doing that in the past, but are now saying, I have this company.
I’m thinking of an exit. What are my options? Let’s talk about rather than just talking to their attorney. They don’t know where to turn to say, do I put my company up for sale? I don’t see a transition continuation with the staff. There are those issues that come up. So that must come up. And then the other thing I can think about are, and just a topic that’s out there among professionals, cash flow.
I mean, you’ve got one expert who may say for the business, well, let’s keep that that cash balance. Let’s keep that nice and high, because that’s an asset and so forth. A valuation person might say, well, we may want to do something else with the cash, because it’s not really worth a lot other than the cash. And then you have the personal financial advisor say, well, if you immediately pull that money out, and give it, you know, to personal.
Well, that may do one thing, but here’s the tax implications. So there are a lot of various things that go on. Can you talk about those types of things that come up? Because those are new, apart from people who think, well, I really want to, I’m ready to wrap it up. I want to sell the business. Let’s find somebody. They can give me a check. I’ll give them the keys. Let’s go. A lot more, lot more to it. There is
Joseph: There’s a lot to it, yeah. So, I mean, ideally, you’re not doing it when you’re just thinking about the sale, right? It’s better to be proactive and to do this in advance, because there’s so much that you could do to prepare the company for sale, prepare yourself for the transaction, to increase the value and make it look more attractive in the eyes of a buyer.
So there’s a lot that can be done there, not to mention that we’re working with the owner himself on his personal wealth planning and designing a lifetime cash flow plan, for example. So they could see clarity of how they’re going to get their cash flow, not just while they’re in business, but at life after business, right?
So coordinating all those things, the tax strategy, is a huge part of it, and sometimes you need two or three years to really set entity structure up the right way, to mitigate taxes on the sale, so there’s more money for the family of the business owner. So there’s a lot that could be done pre sale that I think business owners don’t focus on because they’re so busy running the business, or if they’re in that end game last 20 yards, they’re thinking about the sale and the windfall they’re going to get and they’re not doing the pre planning.
But when you have a financial advisor, and you have a business advisor, and they operate in silos, what’s going to happen? Well, certainly not in every case, but the financial advisor is going to talk to them about retirement and insurance and annuities, and investment. And things like that.
They’re not talking to them about their enterprise value, and that’s the biggest asset that the business owner has. So even if they want to be fiduciary in the nature of their advice, either they’re not knowledgeable to provide advice on a business level, or sometimes their compensation model is constrained. They can’t get paid for business advisory. Their company won’t allow them, compliance-wise, to provide business advisory. And then the business advisor isn’t really educated or knowledgeable on the personal wealth planning side.
So that’s why having a fractional family office, where there’s a business advisor and a wealth advisor on each client case, and they’re coordinating their efforts, is in my view, not just a better model, but a different model that is gaining more in popularity and providing better solutions and outcomes for business owners.
Patrick: Now, in addition to this great network you have of specialists out there that you can tap to maximize advice to prospective clients and the resources you have, you’ve developed a practice now recently with sell-side advisory. Talk about that new capability that’s at Arlington.
Joseph: So it’s actually a separate entity. We have three entities, really, that we run. Arlington Wealth is the assets under management, investment advisory firm that manages client assets. Clearpoint Family Office is the family office that does all the non-investment related planning, business advisory, and personal wealth planning, with the exception of investments, right?
So, tax, developing a proactive tax mitigation strategy, and developing a lifetime cash flow plan, a wealth transfer plan, an asset protection plan. All the things that don’t have to deal directly with investments. The third entity is a business intermediary company in which we can be the intermediary for small to mid-size business transactions. And that’s actually where a branch of Trans World Business Advisors that we started here in Arlington Heights, Illinois.
Patrick: And Trans World Business Advisors is one of the largest networks of business intermediaries in the US.
Joseph: They’re the largest business broker in the world.
Patrick: Yeah, yeah. So not, not a small outfit. In addition to all of this, as if you didn’t have enough time to yourself. You also authored a book. Let’s talk about your book here.
Joseph: I did. So, I authored it with my daughter, Marissa. Exit by Design is the title of the book, and really, the crust of it is about coordinating the business planning with the wealth planning, just like we’ve been talking about, into a unified approach that optimizes the outcome for the business owner.
Patrick: Joe, you mentioned a couple of times that Arlington is a fractional family office, and a lot of times when people think of a family office, they think of having a last name of Gates or Musk, or Rockefeller. And it’s truly not the case. Let’s talk about just your profile for your ideal client. Who is Arlington Wealth Management looking to serve?
Joseph: So we’re looking to serve business owners that are in the five to $75 million range in net worth who need problems solved. They have concerns. They’re very good, they’re very knowledgeable, bright entrepreneurs. They built from the ground up enterprises, and it’s valuable, and it’s in some cases, multi-generational wealth.
But where they are not good at is getting from where they are, which is say they drove to the 20-yard line, and now they need to get over the end zone. And between the 20-yard line and the end zone, they see this big knot of complexity, of all these decisions that have to be made. Financial decisions, tax decisions, wealth transfer decisions, asset protection decisions, some of them have charitable intent. There are decisions on how to do that, and then there are the business decisions on how are my employees going to be treated during a transition.
What’s going to happen to my legacy? Who are the ideal buyers? What’s my business really worth? Am I getting a good deal? And then they’re dealing with these individual advisors too, where they’re trying to piecemeal the siloed advice together themselves, and they’ve never done that before. And I like to think about, do you remember the pilot who landed the plane in the Hudson River?
Patrick: Yes. Sully, yes.
Joseph: Sully, right. Several years ago. He was the best, probably the best pilot to be in that position. He had military training. Was in his 50s, right, prime of his career. Yet he never landed a plane in the Hudson before. And that’s how our clients are. They’re they’re great business owners in what they do, none better, but they’ve never exited a company before. They’ve been running this company for 20, 30, 40 years, and now they just need that guidance to get them from the 20-yard line to the end zone.
Patrick: Yeah, let’s use that analogy even further when you talk about football, with getting into that 20 yards in that red zone, everything gets harder. It’s easy to move up and down the field. It’s all of a sudden, it’s getting right near that smaller range. Everything gets bigger, everything gets more complex.
I mean, the implications if you make a mistake are hazardous, and so that’s where people tend to not operate as well, and that’s where you want to come in, which I think is fantastic. So, Joe with Arlington Wealth Advisors, do you have any territorial restrictions with your clients? Anything geographically limiting, or is it largely the Midwest?
Joseph: No, Arlington Wealth has no territory restrictions. Clearpoint Family Office doesn’t either. The Trans World Business Advisors, we do have a territory that we can market in, but we get referrals from our network outside of the territory. That’s not a problem.
Patrick: Now, among one of the biggest liquidity issues that can come up, or the liquidity opportunities for owners and founders is the sale of their business. And in mergers and acquisitions, there’s been a new insurance tool, relatively new in the last 10 years, called reps of warranties insurance, which does two things.
It transfers a lot of the financial indemnity risk away from the parties, okay, and it enables the process of a merger and acquisition negotiation to move a little bit more expeditiously. But don’t take my word for it. Joe, good, bad, or indifferent, what’s been your experience with rep and warranty insurance for your clients?
Joseph: My experience has generally been good. I see it becoming more common in smaller deals as well, which I think is a good thing. Whereas in the past, it’s been mostly just for the, you know, the mid-size to larger M&A transactions. Is that how you’ve seen it as well?
Patrick: Yeah, it was originally developed for transactions that were $100 million and up in enterprise value. Which, and you think about it sub $50 million deal, so $20 million deals, there are hundreds of those for every 100 million dollar deal that was out there. Which, again, now in the M&A world, in the last five, six years, people don’t talk 100 million dollar deals.
That’s tiny. Now they talk about the multi-billion dollar deals. 95% of those deals all have some form of insurance. And what’s been nice is there’s been a development in the last couple of years where now rep warranty insurance can come down to deals as small as a million dollars in transaction value, from a million to 50 million.
And in coming in there, you’re going to protect the owners and founders, because there is a substantial 10% to 50% of the purchase price can be clawed back from a buyer if they don’t get what they were expecting from the seller. More if they have an allegation of fraud. And sellers need to have that peace of mind that not only are they going to get a maximum return on their purchase, but they’re going to be able to keep it.
Reps and warranties has been able to come in, and that’s been the newest development in the last couple of years. There’s a product called transaction liability private enterprise, TLPE, runs about 16 to $20,000 per million dollars in limits, which, in the M&A insurance world, is a fraction of what the standard policy costs and is developed for smaller deals.
Smaller deals are less risky. Less risky deals should benefit from lower prices. And so that’s why we’re very pleased. Whereas you’re shepherding clients that are in the lower middle market that have these sub $50 million deals, there is a tool now available to essentially give them peace of mind with great care.
Joseph: Yeah, and I think that’s fantastic, and I agree there are some great benefits to it. It helps smooth out negotiations. And, you know, sometimes allow sellers not to leave as much money behind in escrow or, you know, right and indemnity, obligations, and things like that. And it just gives the seller peace of mind to walk away from a transaction that there isn’t the potential for clawback.
Patrick: And even the safest of deals, I mean, low risk doesn’t mean zero risk. We never know what’s out there. And it’s nice, particularly when you have a liquidity event, to be able to not only collect your money but keep it. And so we’re very proud of that. And Joe, as we’re getting through, we’re midway through 2025, what trends do you see going forward, either in business, M&A, or for Arlington Wealth?
Joseph: Yeah. So yeah. Obviously, there’s a lot going on in the economy with new administration, new policies. The tariffs, I think, were a little bit of a shock to the business community. And obviously, depending on what industry you’re in, it’s a bigger shock than other industries.
You know, I have a sense that it’s going to be a volatile year, and while things you know have recovered a bit as of this recording, I mentioned early on that we developed proprietary models to help us make decisions on investments. Those models are a little cloudy at this point. It’s not necessarily pointing green right now, and that doesn’t happen very often, so we’re a little concerned on the investment side, we’re positioned a little more conservatively.
We think that’s been the right approach. It’s limited volatility this year, and I think that’s likely to be the case as we go through at least the middle part of the year. We get into August, September, maybe beyond then, we would hope to get smoother sailing, but I think we’re going to have a bumpy ride between now and then.
Patrick: Joe LoPresti from Arlington Wealth Management, how can our audience members find you, number one? And number two, tell us where we can go ahead and find your book?
Joseph: Yeah, sure. So we each company has a website. I’ll just give arlington-wealth.com is an easy place to find me and connect with me if you’d like to. The book has its own website, and that’s exitbydesignbook.com and you know, anybody who’s listening that wants to download a free e-version, you could do so at that website, exitbydesignbook.com.
Patrick: Exitbydesignbook.com. Fantastic. And grab that. Even if you’re just curious, it’s a great way to have a look at it and then reach out to Joe LoPresti. Joe, it’s been great having you. Thank you so much for informing our clients today.
Joseph: You’re welcome. Thank you, Patrick.
