Posts tagged with: transaction
Too often, business owners don’t recognize the signals and symptoms that they need to start now to plan for their ideal exit transaction and their transition to the reinvention of their dreams. No one ever told you what those symptoms are.
As an owner you surround yourself with exceptional experienced advisors who help you increase sales, build out your team, manage your finances, upgrade your infrastructure, stay compliant with a myriad of licenses and regulations, etc. But who monitors your business readiness to sell, scale or pass the business on to your successors when it is opportune, instead of too late?
Symptoms to Look For
Here’s my list of symptoms to look for. If you recognize that any of them describe you now, then indeed you need to start planning for both that transaction and your transition plan to reinvention. That’s because it takes 3-5 years to prepare you, your business, your family and your finances (personal and business) to leverage that ‘once in a lifetime’ transaction to achieve the reinvention you’ve been dreaming of.
- Age. You are 55+ and you keep postponing any exit or transition planning (“I don’t need to start thinking about it for at least another 5 years”).
- Successor. You keep on keeping on because you have not identified your successor or groomed the assumed successor.
- Retirement. You find yourself pondering about what comes next; retirement, reinvention, golden years. This question in itself can stifle business and cause insomnia.
- Change. You resist changing your business model to compete effectively, grow and strengthen your market positioning. Maybe things have grown stale, and you’ve run out of ideas to keep your business moving forward. Or maybe you would need to pour tons of money into updating your business and you are resisting the investment.
- Motivation. What drives you now? Do you have a hard time getting up in the morning and going to work, or making the calls necessary to keep your business running?
- Focus. Your focus is drifting away from the business. Life changes, demands and opportunities may be causing you to lose focus or shift priorities.
- Family. Your family keeps asking you when you will slow down and you keep saying never.
- Dynasty. You worry that your wealth may not be enough to fund your reinvention lifestyle for decades to come and provide for the generations to follow you.
- Children. You now know your kids don’t want, or are incapable of running, your business.
- Legacy. You are thinking about how to answer the question of what is your legacy and what do you want it to be, and therefore; how that will impact any transaction where you let go of day to day operations.
- Expansion. You are spending more time thinking about maintaining rather than expanding your business. You settle for good enough or watch competitors take the lead.
- Health. You or a family member may be facing specific health concerns that limit your participation in the business, distracting you, which can risk your revenue stream.
- Energy. Your stamina to run the business as you once did is declining.
- Profit. Your financial focus has shifted from maximizing profits to what you can get when you cash out.
- Planning. Your strategic planning efforts stagnate.
- Customers. Your customers are all tied closely to you personally, not the business.
- R&D. You have been reinvesting in the company less and less as you start to pull more cash out of the business.
- Dependence. Your business depends on your day-to day decision making. It’s not the turnkey operations buyers will pay a premium for.
- Exit. You are starting to ask what it will take to make your business buyer ready, buyer attractive and more sale-able.
- Offer – You get one or more calls with offers you’d be foolish to refuse.
- Next Venture – You are more interested in your next opportunity, or to do something else you’ve always wanted to do, pulling you forward.
Start that planning now to ensure you will:
- Maximize the value of your business
- Maintain control
- Increase the leverage you can command at the negotiating table
The longer you wait, you will continue to lose all three.
If you need help to assess your symptoms or make a timely plan to complete the transaction that will achieve your dreams, call 508.820.3322 or email us.
It’s devastating. Ninety-five percent of all businesses never achieve their goals for the business and beyond, not to mention the long-term financial expectations for their families. This 95% statistic is widely accepted as an unchangeable fact and “the risk of doing business.”
I can’t understand why it is still the accepted norm. Just like you confront and address every other risk you face in business, why not illuminate this gap, address it and fix it. I want to help you minimize the risk and overcome this statistical barrier to your success, to fulfill your dreams.
The core causes of this problem have been around since you launched your business. The solutions aren’t easy but they are so inexpensive that you can afford to implement every one and still stay within your budget. The key is, that we must reveals the flaws of businesses today and owners’ biggest self-imposed barriers.
The solution I present is a system that builds a strong foundation for your business, whether:
- You are just starting out, or you’ve been in business a while
- You have a team or no team
- You have revenues less than $100K or more than $10M
- You are on a fast-track to be acquired or want to cash out to pursue your reinvention
When you systematize your entire enterprise for long-term results, it will transform your business and your life. You will gain time, control, freedom and flexibility all while the business prospers, grows and breaks through to achieve new heights of success you didn’t dare dream of – until now. Everything you do to accelerate growth and maximize value makes the business more buyer ready and buyer attractive.
If you are in business delivering product, content or services, then you have a few options to grow your business exponentially. Simplistically, your choices are to:
- increase the number of clients
- increase the volume you sell/client
- increase prices
- decrease costs
- or a combination of these four
When you take action to build a sale-able business, you join the 5% who successfully complete the transaction and transition to their reinvention.
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.
It’s not the same thing. How many of these 8 questions can you check off as done – to make your business ready to be sold?
- ___ Do you have a history of consistent sales and profit growth?
Documented history of sales, profits and growth which you can show buyers provides proof that can be used at valuation
- ___ Do you have at least 2 years of clean financials?
Your bookkeeper and accountant don’t see the whole picture. You have other assets and contracts. All of these will be reviewed and valued. You can’t hide anything from buyers or brokers.
- ___ Do you have a foundation of robust systems, processes and structure and are they fully documented?
Does your business run on consistent processes and procedures or do you run it out of your head? To be ready to be sold, all systems, structure and strategies must be documented.
- ___ Do you have projections showing increasing value for the buyer long after you exit?
Buyers don’t want to buy an old tired business on its last legs. They want to know there’s more life, more opportunity for them to make a good profit for years after your exit. Can you prove that opportunity?
- ___ Are you ready to make the necessary changes to make the business buyer attractive?
How much time, effort, and expertise will you invest back into the business now, as you get ready to move on? Are you willing to set the business up for even greater success without you at the helm?
- ___ Do you know what makes your business buyer attractive?
You must know what it is about your business that makes it valuable enough for someone else to buy it. This is the biggest sale of your life – selling the business you built.
- ___ Do you know what makes your business successful in your market?
Be sure the value is in the business and not just in you the owner.
- ___ Are all your stakeholders prepared for the transaction?
Just because you are prepared for the exit transaction on your terms and you’ve planning your transition to reinvention, – doesn’t mean all your stakeholders are on the same page with you. Before you get to the transaction, be sure all business stakeholders support the transaction so you indeed can make a successful exit from the business.
Many CEOs prepare themselves for their exit and forget to prepare the business. That can make for a very tough transition for the business, clients, team, and suppliers. All of these challenges are totally avoidable if you prepare the business for the exit transaction while you prepare yourself for your exit transition.