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Exit Planning Insights
Deal Killers: Loss of Key Employees
December 8, 2022 / in Exit Planning, Sell a Business / by Al Statz
If you have certain employees who are critical to operations and would be hard to replace, take steps to secure them before a sale. Noncompete contracts can be one way to reduce employee defections. Take a look at your employee agreements, too, and ensure you have appropriate non-disclosure and “no raid” covenants. Give careful consideration to “stay bonuses” as well. Provide an incentive for employees to stay for a period of time post-closing. Talk with …
Deal Killers: An Ineligible Workforce
December 8, 2022 / in Exit Planning, Sell a Business / by Al Statz
If you run a business and you know you have ineligible workers on your team, you must disclose that in a transition. In limited cases, you may find a buyer who is willing to accept the problem and address talent issues after an acquisition. Unfortunately, if you’re selling your business to a strategic buyer (e.g. another company), you’ll find that the appetite for an undocumented workforce is generally low. Larger organizations don’t usually want to …
Operation clean sweep: Preparing your business for sale
December 7, 2022 / in Exit Planning, Sell a Business / by Exit Strategies
You’ve decided to sell. Now how can you get the most for your business? Real estate principles apply, so you’ll want to clean house and maximize your curb appeal. But that’s not all that goes into a successful business sale. You need to “clean up your act,” so to speak, and address some operational issues that may not have been a priority for you over the years. Clean up your financials. Many business owners run …
How to sell your business to a competitor
December 6, 2022 / in Exit Planning, Sell a Business / by Al Statz
When you’re ready to retire, or exit your business, you may think selling to a competitor is your only option. But competitors are seldom your best buyer. They’re rarely willing to pay top value because they’re already established in the market. They can’t see that your “secret sauce” is any better than theirs, so they try to strip away a lot of the goodwill other buyers might pay. Plus, selling to a direct competitor can …
Why 75% of Small Businesses Won’t Sell
October 12, 2022 / in Exit Planning, Sell a Business / by Al Statz
Tom West is considered by many to be the founder of modern-day business brokerage. A few years back, he calculated the percent of small businesses on the market that actually sell. For small businesses, those with sales of $10 million or less, he figured fewer than 25% actually transition to a new owner. That failure rate is shocking, and all too accurate. A lot of factors drive down the 25% success rate, but here are …
Deal Killers: The I-Do-Everything Seller
October 12, 2022 / in Exit Planning, Sell a Business / by Al Statz
Some sellers come down with a dangerous case of “Look how great I am” when they meet potential buyers. They say things like, “I did this. That was my idea. I’m in charge of that. Or, I’m the one driving growth.” And if you have a valuable business that’s attracting buyers – you built something great! But… When it comes time to sell your business, you should be the least important part of the equation. …
Why boomer business owners should watch M&A cycles
August 18, 2022 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Approximately 20% of private business owners are over the age of 65. Another 30% are between the ages of 55 and 64, according to estimates from the Census Bureau Annual Business Survey. If we’re going by age trends alone, that suggests roughly half of America’s businesses will transition ownership in the next five to 10 years. This will be the largest transfer of wealth the nation has ever seen in such a short period of …
M&A Advisor Tip: F-reorganization
July 22, 2022 / in Exit Planning, Sell a Business / by Al Statz
Deal structure can have a big impact on your after-tax proceeds. The right structure can help you retain more of the sale price. For example, an F-reorg is a tax efficient method that allows you (the seller) to rollover equity into the buyer’s new entity without paying taxes on the rollover amount. Without using an F-reorg, you might sell 100% of the company and get taxed on that full amount (ouch!) before reinvesting some of …
Market Pulse – Q4 2021
June 28, 2022 / in Exit Planning, Sell a Business / by Al Statz
Financing Deals in 2021 Presented by IBBA & M&A Source Deal financing has not changed significantly since before the pandemic. On average, sellers continue to receive 80% or more of total consideration as cash at close. (Cash at close includes senior debt and buyer equity.) Seller financing accounts for 15% or less of most deals. For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies …
Is it the right time to sell your business?
May 6, 2022 / in Exit Planning, Sell a Business / by Adam Wiskind
Business owners often ask, “When is the right time to sell my business?” The answer is some version of “A good time to sell is when there is a seller’s market, and the owner and the business are prepared”. Simple enough, but there is a lot to unpack in this response. Don’t Try to Time the Market A seller’s market exists when, because of economic conditions, demand for viable businesses is higher than the supply …
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