Posts tagged with: exit planner

Kevin Manley on Exit This Way™

Listen to Kevin Manley on Exit This Way™

Kevin ManleyKevin Manley, Managing Partner at The Exit Advisors and Manley Strategic in Daytona Beach, FL. returned to join host Kerri Salls on Exit This Way™ for part 2 of Entrepreneur to Exit Planner, It’s All About Value.

Kevin Manley, founder of The Exit Advisors and Manley Strategic, is a noted business & exit strategist and entrepreneur. Kevin holds an MBA, a Masters in Engineering, and a CExP.  He has founded, advised, and/or invested in a variety of companies in consumer electronics, medical technology, philanthropic technology, real estate development, etc. In 1995 Kevin co-founded Yesmail.com, an online e-marketing solutions company. He and his co-founders took Yesmail public in 1999, and sold it to CMGI in 2000 for over $700M.  This 5-year process involved name changes, strategic focus changes, smart advisors, luck, great timing, and great people.

Kevin helps owners of both startups and established businesses maximize their company’s value and formulate a plan to grow their business, leverage their talent, improve their focus, utilize technology, enhance overall stability, and develop and implement an exit/transition strategy.

Entrepreneur to Exit Planner, It’s All About Value

Kevin was an entrepreneur in the heyday of technology, and  now is an exit planner working with owners to create value in terms of positioning for an exit.

What makes your perspective unique as an Exit Planner/Exit Strategist?

Kevin says exit planning is just a different mindset thinking about your business to get to the exit, and that’s the hard part of being an exit planner. In a startup, if you’re raising money, you have to think about the exit upfront, build in to your business plan. So, Kevin talks to owners about their business entrepreneurially, to show them what it looks like from another party’s perspective.

Building value – what does that mean to you and what does that mean for clients?

Kevin gets owners started on the process of rethinking the business operating without them. His simple examples included: recurring revenue, stability and predictability of cash flow, risk. In terms of risk he pointed out lack of customer diversity, of being hit by a bus, not having passwords written down somewhere to address business continuity concerns.

Kevin will lead the discussion with an owner starting with value and increasing that value to make their business more valuable to a third party.

Kevin gave some easy practical steps to put in place for basic continuity planning such as succession planning with basic instructions to successor/spouse in case of an owner’s death. He recommended that ideally an exit planner should be brought in as soon as that succession plan, 8-10 years out, is just a glimmer because it can take that long to groom and transition to successors.

Universal Exit Objectives

Kevin shared what he called the Universal Exit Objectives

  • When do you want to leave?
  • How much do you need?
  • Who do you want to succeed you?

He said that if an owner writes down the answer to any one of these three questions, they join the 8% of all owners who have written anything down. And only 12% of owners have had a discussion about their exit with their professional advisors.

Risk Reduction

In the decision to reduce risk, he recommends that owners want the option to transfer ownership to their children, to insiders or to a third party. Transfer to a third party is always an option in an effective exit plan. When owners assume liquidation is their exit plan and they intend to ride it out until they can’t, he tells them, that essentially they have not plan.

Every business needs an exit plan. Why?

Exit planning is a valuable and necessary service to give owners more options. Kevin has asked owners who have successfully exited their businesses: what was the trigger to start planning? What did it take to be ready to speak with an exit planner?

The answer was they had to get to a point of thinking about: ‘What’s next for me? What’s next for my life, outside the business?’ If owners can’t see that, there’s no reason to make any changes. He’s found that scare tactics from the outside, and he mentioned a few, don’t work.

Kevin educates owners that an exit planner is owner-centric, focused on what the owner wants to have happen as an owner of that business, whereas some of your other advisors; your accountant or attorney for example, may be more reactive to what is happening in the business.

He says that for smaller companies, early exit planning can make manageable changes result in a huge difference for the owner.

Kevin has seen that if owners have thought about an exit, it’s usually just down one path, as if it’s their only path. Put an exit planner in the mix and you can identify several paths to consider. Owners don’t usually take time to consider an alternate path, or as Kevin did at Yesmail, change their business model.

He suggested ways to create recurring revenues or productize what you have. You could end up getting acquired for that one product.

Kevin suggests that an exit planner comes in to a company to have those conversations, to explore options, because they always have their eye on the exit. ‘We talk about the business today but talking about value and sellability with an eye on the exit.’

In contrast, he made the distinction that a business coach or turnaround coach is worried about keeping you in business, helping with your executive team and leadership issues. Whereas, as an exit planner, Kevin will keep an eye on those things too, but always with a focus on how you the owner will exit the business.

Kevin went on to offer tips on personal income tax planning to consider before and after an exit and full circle back to value and the importance of getting a third party business valuation.

Listen to Kevin’s full interview here.

Kevin Manley on Exit This Way™

Listen to Kevin Manley on Exit This Way™

Kevin ManleyKevin Manley, Managing Partner at The Exit Advisors and Manley Strategic in Daytona Beach, FL. joined host Kerri Salls on Exit This Way™ to discuss Entrepreneur to Exit Planner, It’s All About Value.

Kevin Manley, founder of The Exit Advisors and Manley Strategic, is a noted business & exit strategist and entrepreneur. Kevin holds an MBA, a Masters in Engineering, and a CExP.  He has founded, advised, and/or invested in a variety of companies in consumer electronics, medical technology, philanthropic technology, real estate development, etc. In 1995 Kevin co-founded Yesmail.com, an online e-marketing solutions company. He and his co-founders took Yesmail public in 1999, and sold it to CMGI in 2000 for over $700M.  This 5-year process involved name changes, strategic focus changes, smart advisors, luck, great timing, and great people.

Kevin helps owners of both startups and established businesses maximize their company’s value and formulate a plan to grow their business, leverage their talent, improve their focus, utilize technology, enhance overall stability, and develop and implement an exit/transition strategy.

Entrepreneur to Exit Planner, It’s All About Value

Kevin was an entrepreneur in the heyday of technology so I asked him what he learned from that experience that helps him serve clients today.

Kevin briefly told the story of his parents owning their own business and his desire to own his own business. He recognized the internet would be big and decided to become the expert.

It’s a Game

In building his company, he understood and explains to owners that it’s a game, especially when you are navigating to the end. He was very specific that you must identify what others will value in your business and maximize that. You must focus on what will be most valuable to someone else. So, at Yesmail, they had a ‘laser focus’ on what made them most valuable.

As they were trying to raise capital, they realized they did not know what game they were playing. But they got good advisors and their CPA led them to real investors.

Have an Exit Plan

They had to put their plan and their business model on paper in order to get that. That became their exit plan. He says you have to have the exit plan to have the opportunity. If they had not had that exit plan to keep them focused, they would have failed. His advice now is to have an exit plan and work backwards from there to answer the question: How do we get to that?

They hired a CEO who helped turn a me-too company into a valuable company with a unique offering which drew investor interest and led to a buyer. In his blog, Kevin tells the story in more detail of how they had an IPO followed immediately by the sale to CMGI.

After the Exit

Kevin also talked about the story after the exit; in terms of the decisions and options to take an earnout, to go with the business to the new owners, accepting lockup clauses and for how long.

Participatory Exit

In retrospect, Kevin said he had enjoyed owning the business and that he had provided a living for his employees. His employees all benefited from their stock options when the company sold, so that participatory exit for everyone on the team was hugely rewarding to him. Rather than keeping their exit plan quiet, their team knew the plan. Indeed, their exit plan added comfort for all employees, not just the owners.

Kevin admitted there was a bit of luck and timing to the sale of his business, selling one week before the NASDAQ peak. He also explained the impact of that on him personally, as the reality of a stock purchase lock up prevented him from liquidating any of his stock for one year. He and all the founders then sold stock and did just fine, but they had to watch the stock drop from 160 to 40 before they could sell.

It’s an insightful and compelling story to hear. Listen to Kevin’s full interview here.

 

Qualifying Questions For Your Exit Planning Virtual Partner

 

Virtual Partner – Exit Strategist

When you are ready to ask for exit planning help – how to get out, where do you turn for help? You need to know if they are dedicated exit strategists or is their primary business in a related field or expertise? Here are five questions to ask potential advisors to determine if they will focus on your best interests.

1.   What is your specialty? What is your core business?

You want an exit strategist whose focus is exclusively on your optimal exit, who is not distracted by other disciplines.

 2.   How will you charge me for exit planning services pre and post transaction?

You want to know you are being charged for exit planning expertise and exit planning time, not attorney time to do exit planning. You need an exit strategist on board, engaged in your situation years before you need your attorneys, accountants, and wealth and insurance advisors.

 3.   How engaged will you be in my operational implementation and transition up to the transaction?

Leading up to the transaction, licensed advisors will be focused on the expertise they bring to the table. Their availability will be limited to help you with operational decisions and issues leading up to the transaction. After the transaction, you will need your exit strategist engaged to ensure your total integration into your reinvention lifestyle, but after the transaction, licensed expert advisors will move on to the next transaction. How much will they/can they be there for you?

You want an exit strategist who will be fully engaged in operational implementation, growth and optimization strategies, and your own transformation from operational president/owner to the strategic CEO of a stronger more profitable enterprise, not just the 6-month end game.

 4. Will you help me assess exit options and timing/tax/liquidity impact of each?

You need an exit strategist to help facilitate discussions with all your exit advisors to integrate their recommendations and tradeoffs for each exit option you are considering. Any of your transaction experts who stay focused in their own silo of expertise cannot provide the wider perspective you need to make the best decisions.

 5. What will you do to assist me in determining my reinvention plan and my goals and lifestyle beyond the business exit?

All the licensed transaction experts you engage for their expertise can ask you all the right questions, but they expect you to prepare and deliver the answers on your own. You need an exit strategist who will assist you in developing your reinvention plan and lifestyle beyond the exit, test it, refine it and lay out a blueprint to implement it from Day 1 of your reinvention.

Whether you engage the Exit This Way Out Group as your virtual partner or not, you need to use the materials, checklists, tables and guidelines provided here on the site and in our home-study course to make your business a wealth producing machine that will provide the financial independence you dream of to fund your reinvention.

Who’s On Your Exit Team? The Rest of The Team

In addition to the legal team you need around you as you prepare and execute your exit, you also need a wide range of other experts, including a financial team, transaction team, and other advisors, consultants, and experts to complete the sale and your transition to reinvention. Here’s the rest of the scope of expertise you want to assist you through this process.

Financial Experts

Business CPA – You need your business accountants putting the books in order for valuation and in a form that is buyer attractive, showing off the business in the best light.

Personal CPA – You need your personal accountant to focus on your own accounts, or accounts to be set up prior to the exit transaction.

Chief Financial Officer – Even if you’ve never had anyone in this role, you need a chief financial officer looking at the strategic financial impact of every marketing, financing, or growth decision leading up to your optimal exit option. Your CFO can bring valuable advice, expertise and insight to the process leading up to your exit. In addition, just by having a seasoned professional in the role adds value to the business that is appealing to prospective buyers.

Tax Advisor – You need your personal tax advisor to be an integral player in the discussions of your exit options to voice the tax impact on you of each choice and protect your long-term best interests.

Wealth Advisor – Your wealth advisor can help you fulfill your ultimate goals, live the lifestyle of your dreams, and leave a legacy and a dynasty. They can offer the best advice and opportunities if you include them in the discussions early – before you’ve made your exit choices. They can set up accounts in advance ready for you to utilize to maximum advantage at exit.

Transaction Experts

Depending on the size of your business, the type of business and the type of sale you are pursuing, you will want to use different transaction experts. They bring experience, connections, process and negotiating skills to the exit transaction that are irreplaceable for a successful exit.

Business Broker – A business broker assists buyers and sellers of privately held small businesses in the buying and selling process. They will value the business, advertise it for sale, interface with initial buyer inquiries and interviews, discussions, and negotiations. They facilitate due diligence and generally assist with the sale of the business.

M&A Advisors – Mergers and acquisitions is a specialized field of corporate strategy, finance and management dealing with the buying, selling, dividing and combining of different companies to help an entity grow rapidly in some way. M&A advisors, as a sub-niche of investment bankers, do not provide financing.

Investment Bankers – If your business is large enough and the exit transaction is large enough or complex, you may need to work with an investment banker. Investment banks assist in raising capital or acting as your agent to issue securities.

Others

Business Partners – Your partners, whether they are currently active or silent in the business, must be part of the exit planning discussions. Your final plan must consider their concerns and or they can destroy your whole exit.

Life Partners/Spouse/Family – Your business exit and your reinvention plans affect them too. Your exit must take these people into consideration too.

Exit Strategist – You need someone focused on the strategic side of planning, systematizing, growing the business , someone who will help prepare you to move into a more strategic role tell sell well and someone who will help you explore and prepare for your exit and reinvention. You need an exit strategist who works with you on all levels through the whole process, who can coordinate and facilitate your entire exit experts team.

Marketing Consultants – You may want to bring in other experts to maximize the value of the business to the buyer

Staffing Consultant – You may want to hire in key players/successors to make the business more attractive to the buyer

HR Consultant – An Human Resources consultant can help you formalize your corporate culture and tie your team to the company, beyond your exit to secure their future with the company under the new owner.

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