Boomer Bust Archives - Your ExitMap

Cash Flow Normalization

John F. Dini — Thu, 20 Feb 2025 17:16:00 +0000

Cash flow normalization is done with the intention of identifying Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) or Seller’s Discretionary Earnings (SDE). These differing measures are not interchangeable, but are used by different classes of buyers for different categories of acquisition.

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Private Equity and Privately Held Businesses

John F. Dini — Mon, 28 Oct 2024 15:22:17 +0000

Depending on who you are talking to, Private Equity is either the Great Satan or the savior of small and mid-market companies in the United States. The stories depend a lot on the personal experience of the speakers.

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Personal Vision – Life After the Sale Part 2

John F. Dini — Mon, 26 Feb 2024 16:24:53 +0000

In our last article about life after the sale we discussed identity. Even when business owners are comfortable with who they are, however, there is still the nuts and bolts issue of activity.

A business owner spends 20, 30, or (not uncommonly with Boomers,) 40 years focused on running a business. Unless they’ve built a substantial organization that is run by employees, it likely remains their biggest single time commitment right up until they leave. That commitment is frequently a lot more than 40 hours.

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Exit Strategies – The Road Less Traveled

John F. Dini — Thu, 28 Sep 2023 16:20:46 +0000

The road less traveled is often a misimpression when considering a transition from business ownership. Surveys show that roughly 85% of owners expect their exit to happen via a sale of the business to a third party. A third-party sale is certainly attractive. The idea of monetizing decades of work in one lump-sum payoff seems equitable. Years of sacrificing to “invest in the business” is supposed to generate a return. “He (or she) sold the company” when applied to someone who is clearly enjoying a comfortable lifestyle in retirement acts as an advertisement for the benefits of cashing out. Unfortunately, that isn’t only less frequent ... Read more

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Avoiding the “Exit” Word

John F. Dini — Wed, 13 Jul 2022 17:02:52 +0000

Owners don’t like the “Exit” word. They tell us regularly to change it, or that talking about it is uncomfortable. It’s the elephant in the room. I understand. Anyone selling life insurance or funeral pre-planning knows that you don’t start with “So, let’s discuss what happens when you DIE.” For business owners, leaving the business is like a little bit of death. That’s why black humor in the exit planning world goes like this. “There are seven ways to exit your business. Six of those are head first.” Your company has been the central focus of your life for twenty or thirty years, and perhaps ... Read more

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Are Remote Employees Value Killers?

John F. Dini — Tue, 22 Jun 2021 20:40:04 +0000

Remote employees can have a dramatic impact on the value of your business. If your exit strategy is to sell to a third party, take some time to think about the areas where offsite workers could have an impact. Curb Appeal One of the first things any good business broker will look at is your curb appeal. Your business needs to look good, just like a house that’s for sale. (OK, maybe right now a house doesn’t even need to look good, but you know what I mean.) When I brokered Main Street businesses, I was always surprised at how much we had to tell ... Read more

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The Dismal Ds and Exit Planning

John F. Dini — Tue, 10 Nov 2020 19:40:36 +0000

The “Dismal Ds” is an inside joke in exit planning. Every industry and profession has them. In some, it’s “You can have it done well, done fast, or done cheaply. Pick any two.” In planning it’s “Sooner or later, every owner exits his or her business… 100% guaranteed.” Clearly, that refers to the unplanned but inevitable departure from the biggest D – Death. That isn’t the only D, however. There are others, NONE of which lead to a controlled, lucrative, or enjoyable transition. Most start with dis- defined as “dis– 1. a Latin prefix meaning “apart,” “asunder,” “away,” “utterly,” or having a privative, negative, or reversing force.” ... Read more

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When Kids Don’t Cut It

John F. Dini — Wed, 23 Sep 2020 05:28:26 +0000

Many owners want to see their children inherit the business, but what happens when the kids don’t cut it? Some years ago I worked with a business owner whose exit plan was to sell into one of the private equity roll-ups that were active in his industry. His son was finishing college, where he studied for a career in wildlife management. The son’s ambition was to spend his life in the great outdoors. One day my client was beaming when I walked into his office. “Guess what?” he said. “My son called. He wants to take over my business!” After a few minutes, it was ... Read more

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Your Exit Plan: The 3 Inarguable Reasons to Start NOW

John F. Dini — Sun, 14 Jun 2020 01:00:38 +0000

What is Your Exit Plan? If you’ve ever done a business plan for the purpose of raising capital, one of the key questions is “What is your exit plan?” Many business owners think that question is self-serving, intended merely to let the venture capitalists figure when and how they will get their return on investment. In truth, however, that question is far more important. An exit plan is a strategic plan with an end date. Putting a time frame on your plan, and defining the goals to be achieved by that date, creates a future-focused mindset for the owner. It controls and reduces your tendency ... Read more

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EBITDAC : What is Your Business Worth Now?

John F. Dini — Mon, 20 Apr 2020 17:14:50 +0000

Several friends have sent me a picture of an EBITDAC coffee mug this week. As it states, EBITDAC stands for Earnings Before Interest, Taxes, Depreciation, Amortization and Coronavirus. Will this be the new measure of cash flow for valuing your business? A bleak joke, but one that is on the minds of many business owners, especially Baby Boomers in their late 50s and 60s. Many were postponing their exit planning because business has been so good. As one client told me, “In March we had the best year in the history of my company. It looks like April might be the worst.” Downturns aren’t new, ... Read more

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Exit Planning in a Crisis

John F. Dini — Sun, 29 Mar 2020 09:48:09 +0000

Why would you be exit planning in a crisis? At the height of the economic expansion (a few months ago in late 2019) I was reviewing a company’s financial statements. Their sales were stagnant, and profits were minimal. When I asked the owner why his business hadn’t grown, he responded, “Well, the Great Recession hit our industry pretty hard, you know.” Take note that it wasn’t his fault. He was in a hard-hit industry, and the economy dealt him a bad hand. He ignored the thousands of businesses just like his that had grown and prospered in the last ten years. Once you hunker down ... Read more

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Quarterbacking is Not Exit Planning

John F. Dini — Wed, 26 Feb 2020 13:58:14 +0000

Quarterbacking is a popular term when exit planners are talking to clients. It’s supposed to invoke a vision of someone who is in control. Think about a Tom Brady, Aaron Rodgers or Patrick Mahomes standing tall in the pocket, surveying the offense and defense unfolding before him. There is a real problem with using “Quarterbacking” when referring to your exit planning professional team. The quarterback calls the plays. The job of the rest of the team is to run them as instructed. I’ve yet to meet a CPA or attorney who thinks that is the best way to develop a client’s exit plan. Teamwork Exit ... Read more

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