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Exit Planning Insights
M&A Advisor Tip: Buy your buddy a beer, not experience
November 2, 2021 / in Exit Planning, Sell a Business / by Al Statz
I’m all for friendships, but I wouldn’t risk my financial future on one. Unfortunately, many business owners do just that. If you’re like me, many of your professional advisors have become your friends, and you want to honor those relationships. But M&A is a specialist’s world. If you engage your usual advisor (e.g., attorney) to conduct a business sale and they are not a specialist in M&A transactions, you could be risking everything you worked so hard for. Think of this as brain surgery. You wouldn’t use your general doctor who has done …
Employee Retention Raises Business Value, Especially Now
October 26, 2021 / in Exit Planning, Sell a Business / by Al Statz
“To win in the marketplace, you must first win in the workplace.” Those words of Doug Conant, business leader and former CEO of Campbell Soup Company, ring particularly true today. The talent market was tight before the pandemic, but now we’re in a critical state. Finding employees, and keeping them, is a challenge for everyone. And if you’re selling your business, it just might be the buyer’s number one concern. In the latest IBBA and …
Management Buyouts are a great option, but consider the risks
October 12, 2021 / in Exit Planning, Sell a Business / by Adam Wiskind
One of the more attractive exit options for you as a business owner is a management buyout (MBO). That is when your management team works together to buy either a total or a majority stake in your company, thus taking control of the company themselves. There are several benefits to selling your company to your management team: You can reward loyal managers with an opportunity to gain equity in the company. Managers are more likely …
The happiest business owners know what’s next
October 8, 2021 / in Exit Planning, Sell a Business / by Al Statz
I had the privilege of chatting with Bo Burlingham, former executive editor for Inc. magazine and author of several books, including Finish Big: How Great Entrepreneurs Exit Their Companies on Top. We talked about one of the key discoveries that led to the book, namely that so many business owners were unhappy after selling their companies. It didn’t really matter how much someone got for their business – some sellers were delighted while others were …
M&A Advisor Tip: Time Kills All Deals
October 8, 2021 / in Exit Planning, Sell a Business / by Al Statz
More than purchase price or structure, time is the most likely reason a business sale will fail. Time breeds frustration and fatigue. From irascible attorneys to disorganized brokers and licensing issues, plenty of factors can bog down a deal. Sooner or later one party or the other gets fed up and rationalizes, “It wasn’t meant to be.” Your advisor should have a reasonable client load (no more than four or five is ideal) so they …
M&A’s dirty playbook
September 23, 2021 / in Exit Planning, Sell a Business / by Al Statz
If you work in M&A, you can take a class on how to take advantage of people. It’s true! Buyers can go through mergers and acquisitions training, at some of the most prestigious universities, learning how to pay as little as possible for a family-owned business or privately held company. M&A transactions are complex, and it’s natural that buyers and sellers will have some competing interests. When both parties come to the table in good …
M&A Advisor Tip: Take a vacation to grow your value
September 23, 2021 / in Business Strategy, Exit Planning / by Al Statz
Build a strong management team and work on transitioning yourself out of the business. Buyers want to see that the business can run—and run well—without your constant attention. What would happen if you took the summer off? What would you come back to? If the answer is locked doors, then you’ve got some work to do. If your team might call you and have a meeting once a week, you’re moving in the right direction. …
Secure Your Final Exit
September 13, 2021 / in Business Valuation, Exit Planning / by Victor Vazquez
A significant concern for the seller of a business who retains a minority position after a sale, is how to sell the remaining shares if things do not work out as expected. This type of sale is commonly referred to as a majority recapitalization. There are many ways things can go wrong. But since the seller no longer has control over the company, they face the challenge of how to facilitate a final exit. Imagine …
Keep widening your moat
September 10, 2021 / in Business Strategy, Exit Planning / by Al Statz
When buying a business, one of the qualities buyers look for is barriers to entry. The harder it is for someone to get started in your business or take away your customers, the bigger the barrier. When investing in businesses, Warren Buffet talks a lot about moats. “In business, I look for an economic castle protected by unbreachable moats,” he says. “If you have an economic castle, people are going to come and want to …
M&A Advisor Tip: Stay Bonuses Add Value
September 10, 2021 / in Exit Planning, Sell a Business / by Al Statz
Confidentiality is important in a sale. But what do you do when critical employees must be informed? We recommend stay bonuses. A stay bonus provides an incentive for key employees to cooperate and assist with a sale. We see stay bonuses ranging from 20% to 100% or more of an employee’s salary. It’s common to allocate around 50% percent at closing and 50% six months or a year later. Buyers want assurances the management team will stick …
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