Do you want to know the big question we ask business owners who attend our exit planning conferences?
We ask: What kind of business owner are you?
Because there is a significant difference between business owners that proactively plan for their eventual succession versus those that do not.
Potentially millions of lost value when the eventual business transfer takes place. Every business owner needs to carefully consider this reality. If your largest single investment is in your business AND if you have no plan regarding what to do with it when you eventually retire, then you could not only be losing out on significant potential income from its sale but your family and financial legacy could be impacted as well.
There are only two kinds of business owners:
The fact is you will eventually depart from your business. As much as you want to put that off for as long as possible, the reality is, no matter how hard you try to avoid it, a business transfer will take place. Whether you assume that your children will eventually take the reins of the company or you hope your employees will buy you out, or best of all: A third party pays you a significant sum for your company, a succession event will occur at some time in the future.
How prepared you are personally and how equipped your business is for this transfer will depend, to a large degree, on two things:
Both often play a role simultaneously in how the exit works, no matter what method you use to facilitate your exit event. In reality, you need to look at your succession not as an event that will take place at a point in time, but rather as a process that you need to initiate the day you open your doors for business.
Building a “buyer ready” business requires planning, thoughtful deliberation and hard work. But all this will pay off when you do eventually leave the business to a buyer. Building a buyer ready business essentially means that you are creating an entity that buyers will view as less risky than those opportunities where the company has not prepared for their succession.
Risk is the common denominator among all buyers no matter if they are strategic, synergistic, in your industry, outside of your industry, or purely financially driven. Each buyer will determine the level of risk and his/her comfort level with the preparation you have made to build a company that is ready for your eventual transition.
What are common traits that that buyer ready businesses have? What we have seen over the years and what we hear from buyers is this:
These eight items, if focused on and addressed regularly, can have a huge impact on reducing the perceived risk in your business on the part of buyers. Keep in mind that no matter how well it’s managed and run, there is no such thing as a perfect business. In fact, many of these eight are moving targets and are “in the eyes of the beholder.” So, don’t look at this list today and become discouraged thinking, “Wow, there is not a buyer out there that would be interested in my company”.
The reality is the path to being buyer ready is never-ending. The key is starting on it now and beginning to address any (or all) of the items above. Even if you haven’t addressed on one or more of these today, all buyers will be concerned about is that you have a plan in place to reach them. And if you are following your plan, then buyers will have significantly more confidence in your business than if you have no plan at all.
That really is the beauty of the Generational Equity exit planning program. All our clients are provided with A Roadmap for Enhancing Value document at the end of our initial evaluation. This allows them to clearly understand what needs to be done to both enhance the company’s value over time but also improve its salability in the eyes of most buyers.
If you are interested in moving from the category of being a business owner with no exit plan to one with a full strategy, then attend a Generational Equity M&A executive conference. To learn more about this no-obligation, complimentary meeting designed to help business owners begin to build a buyer ready business, please follow these links:
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2017 Generational Equity, LLC. All Rights Reserved.
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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