Exit Strategies Insights

Industry insights, knowledge base and announcements for business owners and professional advisors

Exit Planning Insights

Manage Working Capital to Increase Business Value

As you likely know, working capital equals current assets minus current liabilities. Companies that have a high level of cash tied up in current assets (primarily cash, accounts receivable, and inventory) without similar levels of current liabilities are not as attractive as those who tightly manage their working capital. Buyers are often leery of businesses that require high working capital to sales ratios because as sales grow the company must continually invest more cash in …

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Business sale planning: Three lessons from Shark Tank

As an M&A advisor having participated in the sale of businesses ranging in price from $500 thousand to $100 million, I enjoy watching ABC’s Shark Tank. On the show, entrepreneurs pitch their businesses to a panel of five investors (“sharks”) who then decide whether or not to invest. Today I want to pass along three key takeaways from Shark Tank for every business owner who plans to sell their business some day. 1. The business valuation …

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How to Build a Sellable Construction Business

With the San Francisco Bay Area building industry booming I am regularly approached by the owners of construction companies with requests to help them to sell their companies. As interest rates are low (but creeping up) and investors are still in the market for solid businesses, some construction company owners with strong financial histories and future growth prospects are looking to cash out. However, even in the best of times construction companies are notoriously difficult …

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Inside the Mind of a CEO

Of course it’s in a CEO’s DNA to think big, challenge the status quo, set stretch goals and inspire teams to perform to their full potential. So, why did this recent CNN Business article on How power changes the CEO brain catch my attention?  Because my wife pointed it out to me Seriously, according to this article, neuroscience researchers have found that those who feel powerful become: more goal-oriented and think more abstractly more optimistic about …

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Business Sale Planning – How CPA’s Can Help

Exiting right requires early planning and help from a team of advisors that is often formed by a company’s CPA. In our work as M&A brokers, business owners often come to us emotionally ready to sell but unrealistic about the value and condition of their business. And frequently they are out of time or unwilling to re-position the business for a more lucrative sale.  Misconceptions, clouded judgement and lack of planning are all too common. Fortunately, a …

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Business Valuations Can Create Value, Not Just Report It!

I recently completed a valuation engagement for two shareholders of a California manufacturing company who were going through a buy-sell transaction. After the sale, the buying shareholder called to tell me how my valuation report gave him the confidence he needed to complete the purchase, take on debt, and revamp the company’s business plan. Besides making my day, his call made me think about why almost every business owner can benefit from a valuation. When …

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A Lease Can Make or Break a Business Deal

The transferability of a commercial property lease can have a direct impact on the potential sale of a brick and mortar business enterprise. Most commercial leases contain restrictions on the tenant’s power to freely transfer or assign the interest in a lease. These restrictions are necessary for the protection of the landlord, providing assurance that any successor of the business and the lease has the financial and legal wherewithal to pay the rent. In rare …

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August 21st Seminar: How and When to Exit Your Business for Maximum Value

Are you considering retirement or exiting ownership and wondering if you’re going about it the best way? Will your business sell for maximum value? Please join us for an exclusive, limited-seating breakfast seminar in Roseville on Tuesday August 21, 2018 for business owners contemplating their exit. Learn the ins and outs of successful exit strategies and how to maximize value when you sell. This free, educational seminar is sponsored by Exit Strategies Group and Exchange …

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Avoid These 6 Common Deal Breakers in the Business Sale Process

Finding a willing buyer for your business is worth celebrating, briefly. In my experience, a majority of owner-negotiated “deals” fall apart before reaching the closing table.  In this post I will discuss several common deal breakers that I’ve seen, mostly involving differing expectations and poor preparation, and how you can avoid them. But first I want to be sure you know what a Letter of Intent (LOI) is. An LOI is a non-binding agreement between …

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Go on Vacation … An exit strategy for small business owners

Do you plan to sell your business in 1-3 years? 3-5 years? 5-10 years? If so, here’s a simple preparedness test. Take a vacation! Ask yourself, “What would happen to my business if I left for a 3-week vacation?”  Some scenarios: Business grinds to a halt.  Since you do most of the work yourself, when you take a vacation sales drop 50% or more. Outbound selling stops.  Like many business owners, you are the main …

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