Your ExitMap Blog gathers contributions from top exit planning professionals across the country that are indexed into four categories. They include select strategies for planning your exit, ideas for building your company’s value, transfer options you can choose from, or preparing to enjoy your post-exit lifestyle. This page shows the most recent posts from Your ExitMap Blog. If you are seeking a qualified exit planning professional, you can view a map of specialists here.
All articles are copyrighted by the authors, and reprinted here with permission. Each author’s contact information is available via a link at the end of the article.
Most Recent Your ExitMap Blog Articles
Most Recent Blog Articles
Quality of Earnings Part 1: Revenue Traps This will be the first of several columns on quality of earnings. While a formal, third-party Quality of Earnings Study is more often seen in mid-market transactions, even small business owners should be aware of the factors that can cause discounts to a selling price long after they thought it was settled. There are few things as exciting as receiving a Letter of Intent to purchase your company. It may specify a dollar amount, or (as often happens with Private Equity Groups or PEGS) it may set a target range for a price based on multiples of profit. The exact profit, or earnings, that will ... Read more 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 Exiting a Family Business: Three Questions Transitioning a Family Business has special issues. This interview was reprinted last week in the newsletter of Steven Bankler, CPA. We asked San Antonio business consultant John F. Dini, one of the nation’s leading experts on business ownership and exit planning, for his advice on handing down the family business. As the author of Hunting in a Farmer’s World, Beating the Boomer Bust and 11 Things You Absolutely Need to Know About Selling Your Business, Dini literally “wrote the book” on succession planning. He recommends that Baby Boomers and other business owners with an eye on retirement carefully consider the following questions. What will your role in the company ... Read more Exiting a "Time and Place" Business “The purpose of middlemen in the marketplace is to provide time and place utility.” I remember the light bulb going on in Economics 101 when my professor said that. Suddenly, I understood the concept of added value. Someone had to get the product to the customer. “After all,” the professor continued, “The footwear manufacturer in Massachusetts can’t sell a pair of shoes directly to someone in California. They can’t manufacture and handle thousands of customers. It would be a nightmare, and completely unprofitable.” The fact that Massachusetts was still known for shoe manufacturing gives you some idea of how long ago this took place. So long ago, ... 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 A Transition to Exit Planning It is time for a new direction. This marks my 400th posting to this site. I’ve enjoyed writing weekly about the daily issues and opportunities of business owners for almost ten years, but it is time for a change. Awake at 2 o’clock has a new look and new navigation, although we decided to keep the title, logo and banner. More about that in a bit. First the why behind the change. Regular readers may have noticed that, over the last year, I have been turning more frequently to exit planning subjects. That reflects my own career progress. Before 2007 I sold businesses as a ... Read more Stop Managing Why would anyone advise business owners to stop managing? Management is a proven science. From the time and motion studies of Frederick Winslow Taylor in the late 1800s, to Matthew Kelly and Patrick Lencione’s Dream Manager, we are constantly in search of ways to make employees more effective. Management trends (some say “fads”) come and go. Wikipedia lists a number of major theories since the 1950s, including Management by Objectives, Matrix Management, Theory Z, One-minute Management, Management by wandering around, Total Quality Management, Business process reengineering, Delayering, Empowerment, 360-degree feedback, Re-engineering and Teamwork. You could probably throw in a couple of offshoots like ISO 9000, Open Book ... 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 Planning: Telling Secrets Planning your exit from a business is a process of telling secrets. For many owners, it is the most terrifying part of selling. A rancher in South Texas once said to me, “I’m going to tell you a secret, and you have to solemnly swear not to tell anyone. When you do, you have to make them swear the same thing.” Most business owners are very cautious about with whom they share their exit plans. The logic is intuitive. The more the information is shared, the bigger the chance is that someone will use the knowledge against you. Competitors will tell customers, insinuating that your company will no longer ... Read more Protecting Your Best Asset If you are planning your exit from the business, what is the best asset that you have to sell? Unless you have patented product, exclusive rights, or long-term customer contracts, you answer was likely “Our people.” Even if you have strategic differentiation like the ones above, “our people” was still likely a top-three answer. Proponents of Human Resource Accounting correctly point out that few businesses have a bigger investment. Hiring, training and developing talent is at the center of most successful organizations. But people aren’t chattels. How can someone rationally consider paying top dollar for your successful business when its best asset might disappear the ... Read more |
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