Your ExitMap Blog
Exit Planning Articles Focused on Exit Strategies
Plan: Exit Strategies
What do you need to know to prepare well, and successfully implement a lucrative transfer of the business? What do the acquisition markets look like? How do current events impact your time frame or financial objectives?
What do you need to know to prepare well, and successfully implement a lucrative transfer of the business? What do the acquisition markets look like? How do current events impact your time frame or financial objectives?
Most Recent Your ExitMap Blog Articles
After the Exit; "Nothing Will Change" “Nothing will change.” It is almost de rigueur for an acquirer to include that in his or her opening comments to the incumbent staff of a just-purchased business. Sometimes it is the seller’s attempt at making folks feel better. “Don’t worry. They promised me that nothing will change.” In the moment, it seems like a calming thing to say, a confidence builder for the employees who have just been informed that they have a new boss. In the long run, it can cause more problems than it solves. Everything Changes In any company, change is ongoing. Employees are asked to learn additional skills. Systems are upgraded. Procedures ... Read more The Unsellable Company What does an unsellable company look like? Some business brokers will assert that there is a buyer for any business. That may be true, but historically four out of every five small businesses listed for sale fail to sell. In this post I am specifically discussing profitable Main Street businesses. That is loosely defined as those valued at under $3,000,000. “Small” doesn’t necessarily refer to size. Some low margin businesses, such as those in distribution of commodity products, could have revenue well into eight figures and still be not command a $3 million valuation. Others, like those with proprietary software, might have a few million dollars in ... Read more Exit Planning in a New Political Environment What does a new political environment mean for business owners who are planning to transition their businesses? Should you accelerate your plans, or slow them down? As I’ve said many times in this space and elsewhere, the biggest single factor in successfully selling a company is the current condition of the financial markets. Since the Great Recession, the Federal Reserve has poured new cash into the system at very low interest rates. This “cheap money” has trickled down to fund a wave of leveraged buyouts by financial professionals seeking a better return than that from more traditional investments. This wave of cash enables some 7,000 private equity ... Read more Exit Timing and the Global Economy How much will your exit timing be affected by the global economy? Most small businesses serve local markets. Their owners, if they have thought about it, plan to sell to a local individual. If the local market is healthy, why worry about the rest of the world? A few weeks ago I attended a presentation by Austan Goolsbee, former Chairman of President Obama’s Council of Economic Advisors and the youngest member of his cabinet. Dr. Goolsbee was also a college champion debater (he beat Ted Cruz in the national finals) and a member of an improv troupe. That makes him an anomaly in the “dismal science;” ... Read more Business Buyers: The "Buy Now, Pay Later" Generation If you are preparing to sell your business, your buyers will likely be members of the “buy now, pay later” generation. Generation X is the first demographic group to be raised in a culture that put little emphasis on savings. Diner’s Club was introduced as the first “charge card” in 1960. By the end of that decade competition from member cards (American Express and Carte Blanche) and bank-owned revolving finance cards (MasterCard and Visa) began placing millions of cards in consumers’ hands. In a competitive credit environment, advertising for the revolving charge cards was directed to the pleasures of paying for something after you already enjoyed the ... Read more The Immortal Business Goes on Forever Do you run an immortal business? I hope so. If you answered “no,” or even hesitated to be sure of your response, then you don’t think of your business as immortal. So when do you plan to shut it down? Most owners react viscerally to that question. They’ve invested too much time and too much sweat to watch their companies become a memory. They care too much about employees and customers to entertain the idea of abandoning them. For many, the business is a part of them. Shutting it down would be like having a piece of you die. Ironically, we play mental gymnastics in our ... Read more Selling to Employees: Is Your Exit Strategy Right in Front of You? When I interview a prospective client for exit planning assistance, we usually explore selling to employees. The first reaction is always “That won’t work. They don’t have any money.” If you have a company with reasonable cash flow, a talented management team and sufficient time, selling to employees is not only a realistic option; it may be the best way to get value from your business. I’ll define those parameters for you in a minute. If you haven’t read my eBook Beating the Boomer Bust, follow the link for the free download. My research shows that the hard numbers will inevitably translate into a hard market. ... Read more What the Heck is Exit Planning? The wave of Baby Boomer retirements is beginning. I’ve been writing and speaking about exit planning nationally for the last ten years, (you can download my free eBook on the subject here), but the inevitability of the demographics is gaining momentum. Today, Boomers in their late 60s are starting to sell the businesses they’ve built over the last 30 years or so. They are just the tip of the iceberg. Millions more are steadily approaching their career finish lines at a rate of hundreds every day. Exit Planning is a new discipline, developed to meet a massive market need. Unfortunately, like any new service offering, ... Read more What is the Right Price? Of all the misconceptions by business owners, the ones surrounding their company’s value are both the most common and often wildly inaccurate. I’ve been working for the last couple of months on the training videos for advisors in our new product, The ExitMap®. (You can take the assessment for free at www.myexitmap.com). In one session, we role-play a vignette about a financial planner discussing the value of a business with a client planning retirement. Part of it goes something like this. Q: “So Bob, how much do you expect to realize from your business when you sell it?” A: “I’ve heard from my accountant that most small businesses sell ... Read more Not Just Workers...Qualified Workers A few weeks ago I attended one of Trinity University’s Policy Maker breakfasts. Although living in a large city has its drawbacks, it is great for access to events such as these. It takes substantial ticket sales to justify top-rank speakers, and Trinity’s series brings the best. The speaker was Richard W. Fisher, immediate past President and CEO of the Federal Reserve Bank of Dallas, as well as almost 11 years on the Federal Open Market Committee, where he voted on monetary policy under Alan Greenspan, Ben Bernanke and Janet Yellen. In Q&A time, I had the opportunity to ask how he could project robust growth ... Read more Is Your Business in the "Neutral Zone?" As Baby Boomers business owners approach retirement (the youngest of them turned 50 this year) they face a unique challenge. The market for small businesses is increasingly a buyer’s smorgasbord A shrinking middle-aged population, corporate competition for talent and less interest in the long hours associated with many traditional small businesses combine to make selling many Boomer enterprises a more difficult proposition. The best-of-class companies on both the smaller and larger end of the spectrum will still stand out as appealing propositions to buyers. On the main street side (companies selling for less than $3 million or so) there are still plenty of aspiring entrepreneurs who ... Read more Boomers and the Lost Generation Those who read this column regularly are well aware of the huge shifts underway as a result of the Baby Boomers’ coming exodus from the workplace. Those who aren’t familiar with the issue are invited to download my free, 45-page eBook Beating the Boomer Bust. Almost four years ago I mused about the chances of Generation X, smaller in numbers and less accustomed to competition than the generations immediately before (Boomers) or following (Millennials) becoming another Lost Generation, much like that of the F. Scott Fitzgerald era. Now, I’m seeing and hearing more evidence that such may be the case. A friend who works closely ... Read more Owners Live in Two Different Worlds Business owners live in two different worlds. If you are a Baby Boomer, the title of this column might bring memories of any one of the many covers of the song by the same name. (Everyone from Nat King Cole to Roger Williams, and from Jerry Vale to Englebert Humperdinck recorded it.) My application of it in business refers to the chasm between those owners who plan to sell a business valued at less than $3 million, and those who have companies valued at more than that. In M&A parlance; “main street” and “mid-market” businesses. Some background is in order. I spent the week at two conferences. At the Business ... Read more Ageing Boomer Entrepreneurs: Fearful or Smart? Do we become more cautious with age? Startups are usually associated with younger entrepreneurs. By the time they reach their 50s or 60s business owners tend to tackle fewer big new ideas. Those that do tend to be successful enough that they can segregate the risk in a way that won’t threaten their core livelihood. Are they smarter, or just more fearful of failure? There are any number of business axioms about the value of experience. “Experience is what you get when you don’t get what you want.” or “Good decisions come from experience. Experience comes from bad decisions.” Does the caution that accompanies age come from experience, ... Read more Where Will All the Small Businesses Go? What would the small business landscape look like if over one million small businesses disappeared? Get ready, it’s about to happen. I write and speak frequently about the passing of the entrepreneurial generation. Driven by competitive pressures to succeed, the Boomers became small business owners in unprecedented numbers not seen since. They now account for about 2/3 of all the small employers (under 500 workers) in the United States. The two generations that follow, the Xers and Millennials, don’t have the capital, the material ambitions, or the need to chase the Boomers into small business. For a free download of my ten-article series on this transition, go ... Read more |