Only 22% of Business Owners Have a Succession Plan
What is Yours? Let EXIT STRATEGY PLANNERS guide you.
Exit Strategy Planners are experts at creating a sound plan to help you exit your business, your way. Our interactive education with enhanced resources collaboration among advisors creates unlimited possibilities. When selling your business, owners need to make sure their business continues to run at optimum levels. This means working in the Business 75% of the time. The other 25% of your time should be working strategically on your Business. When you’re seriously considering selling your business, you must commit to a plan and work with a professional team who can implement a Structured Sales Process with integrity.
The #2 reason business transitions fail is business owners can’t let go. You’ve worked hard and built your Business. One way or another, you will exit the Business. Whether it’s a family member, employee group, large corporation, or a unsolicited offer - you will have a difficult time transitioning your Business without knowing its worth. Completing a valuation with a licensed professional will result in a realistic idea about price expectations. Negotiations will be less stressful for both sides. This will also help you understand your risks and how to modify your plan if needed. Most certified business appraisers quote a project fee or an hourly rate, with outside expenses billed separately. Depending on the scope of the valuation, a valuation can cost anywhere from $2,500 to over $20,000.
According to the SBA, the #1 reason most business transitions fail is due to a lack of planning. A successful transition can take 1-5 years to execute. On average only 25% of businesses sell. There’s a tidal wave of competition coming as millions of the baby boom generation business owners continue to retire, 50% will sell, if well planned and executed with the help of professionals. The business owners who are most successful are going to be those that planned ahead! Having a plan and executing it increases the chances the people you care about (employees, customers, partners/investors, family) will be taken care of. Having a vision after you exit will help you avoid procrastinating on developing your plan.
How We Help You:
- We help you determine weaknesses and point you to the advisors who will help improve them.
- We help you determine what your business will sell for in today's marketplace.
- We help you pinpoint growth possibilities in the future.
- We help access who is the ideal acquirer.
- We help you determine when is the best time to transition guided by your initiative's.
- We help you implement a definitive EXIT plan
- We cause you to take action to make financial and management adjustments.
- We help you plan what’s best for you, your family, and your employees
- We help you sell your business for the most profit
Only 25% of business owners have a Succession Plan. We believe it’s our duty to help you develop an effective plan!
We will help you:
Determine the financial worth of your business today, and project its potential value;
Take action to make meaningful financial and management adjustments;
Implement effective strategies to manage your wealth and minimize your tax burden;
Plan and execute a definitive, and comprehensive EXIT plan;
Act in your own best interest, and that of your family and employees;
Sell your business for the most profit!
The #1 reason business transitions fail is due to a lack of planning, according to the SBA. A successful transition can take years to execute, and, on average, only 25% of businesses sell. A tidal wave of competition is coming as the baby boomers begin to retire. The business owners who will be successful in selling their businesses will be those that plan ahead!
The #2 reason business transitions fail is business owners can’t let go. You’ve worked hard to build your business, and you want to make sure your hard work is accounted for. One way or another you will exit the business; having a concrete plan to execute ensures that family, employees, and customers will be taken care of. Before you talk to your lawyer or a business broker, get your business financials and succession plan in order.
Whether it’s a family member, employee group, or large corporation, you will have a difficult time transitioning your business without knowing its worth. A current market valuation of your business also guarantees a streamlined negotiation process. We will take stock of assets and identify which to include in the sale, determine your risks and quantify intangible assets.
Completing a Valuation with a CMA valuation professional will result in a realistic idea about price expectations. Your tax advisor can help you complete our Sellers Discretionary Earning Worksheet and Multiplier to determine when you should invest in a Business Valuation.
Selling Your Business
The team at Exit Strategy Planners www.exitstrategyplanners.com are experts at generating a plan to help you exit your business – your way. This website has three steps to begin your CMA and succession planning process. When selling your business, you need to make sure your business continues to run at optimum levels. This means working in the business 75% of the time. The other 25% of your time should be working strategically on your business. When you’re seriously considering selling your business, you must ask an all-important question: “What am I doing to increase the asset value of my business?” ESP has created a structured sales process which will help you with strategic decisions and a successful transition
Due Diligence Services
Buyers want the facts, and they will be asking scores of financial questions. You need to be prepared to answer questions about the reporting end of your business. This includes balance sheets, assets and liabilities and the taxation position. They all need to be ready to view and in a professional package when you’re selling your business. Assume the person or corporation considering the purchase of your company is going to do an outstanding job of due diligence so prepare accordingly. You’ll need clean financials (ideally from the most recent five years), as well as payroll details and a clear explanation of each P&L line item. We help you be prepared to answer the hard questions and we will be there to help you.
Exit Strategy Planners is dedicated to helping business owners sell their businesses. Working with current owners we help you identify like-minded people or businesses that will continue the traditions your company was founded on. We facilitate smooth and successful transfers of ownership at the right time by proper planning and execution. (Link) Business owners should be operating their companies the same way whether they are preparing to exit or not. The key is to put the numbers in the right places in your financial statements
Considerations you should be thinking about that will help determine our assumptions and justifications that affect your asking price:
- SDE Multiplier worksheet (link)
- Write down all current and past ideas to grow the business
- If you could wave a magic wand over your business and money or resources were not a problem, what would your business look like in 5 Years? Sales, Products, Acquisitions, additional complementing Patents?
- Obstacles the business has to overcome?
- Potential Buyers, Competitors, Suppliers, Customers?
- Who is your business taking business away from?
- What is competition up to?
- What unique market niche does your business fill?
- Threats the new acquirer might face?
- What details must be completed so it won’t get in the way of a transition?
- Why are you selling if it’s ready to take off/ big question for buyers?
Preparation thoughts you should write down when considering for exiting your business
- When you’re seriously considering selling your business, you must ask an all-important question: "What am I doing to increase the asset value of my business?"
- Assume the person or corporation considering the purchase of your company is going to do an outstanding job of due diligence so prepare accordingly. You’ll need 3-5 years of clean financials (the current YTD of employment too), as well payroll details and a clear explanation of each P&L line item.
- Assume the acquirer considering the purchase of your company is going to ask the hard questions, we help you be prepared.
- Don’t stretch the truth…don’t lie – period! If there’s bad news (difficult employee for example), disclose this information if asked. If you get caught once buyers assume there are more out there.
- Every business owner wants to paint the best picture possible about their business and they should. In buying and selling companies full disclosure is always best.
- Seller Neglect – Often, once a seller has decided to sell they begin to neglect their business. A seller must keep increasing sales throughout the exit process. Sales, Sales, Sales is like location, location, location! Owners must keep their eye on sales and halt non-essential expense’s. Buyers will pay more for a business with increasing sales than one with decreasing or stagnant sales.
- Divide your time by Working in the business 75% -Working on the Business 25%
Structured Sales Process
Selling your business is one of the most critical times in your life. It's essential to be prepared and ready for any prospect that may come through your door. It helps you plan and execute by following the 4 areas of concentration below. The list below is the normal time of the sales and transition process.
First 60 Days Strategic and Financial Analysis
- Recast past financials
- Industry research historic trends
- Industry research forecasted growth
- Establish value drivers
- 5 year forecast of income and cash flows
- Intangible asset assessment Business Health Gauge
- Value range established
- Presentation to management team or board of directors
- Exit strategy options
- Decision to sell or not to sell
Next 60 Days Offering Memorandum Package Created and Proofed and Professional Booklets Produced
- Executive Summary
- Business Description
- Drivers of Value
- Barriers to Entry
- Past and Projected Financials
- Strategic Growth Ideas
- New Business Development Initiatives
- Pipeline of Work in Process
- One Page Marketing Profile excluding company name and address
- Organizational Charts of Staff and Suppliers
- Corporate Articles and Patents
- Product Mix and Photo Presentation
- Confidentiality Agreement
Next 60 Days Marketing and Selling Process
- Corporate Buyers Identified
- Investment Banks Identified
- Hedge Fund Buyers Identified
- Marketing Profile is Distributed
- Interested Buyers sign Confidentiality Agreement
- Offering Memorandum Delivered
- Buyer/Seller Meetings
- Qualified Buyers at the table
- Letters of Intent
- Offers Presented to Management
Final 60 Days Execution
- Conduct Due Diligence
- Facilitate Legal Teams Needs
- Negotiate Definitive Purchase Agreement
- Coordinate Closing
- Prepare Closing
- Insure All documents are Distributed to All Parties
The strategy steps described here are just the beginning. They're a start in the right path toward exiting. If you want to sell your business for maximum profit, then you need to find a company that will implement a structured sale process and help you start planning your strategies now.
Exit Strategy Planners helps you by guiding you through these initiatives.
- Importance of confidentiality and timing
- Is part of your family or management in your succession plan?
- How to sell your business for the highest price
- Engage a Licensed Valuation expert
- Decide when you should sell
- Properly positioning your business for sale
- Identifying and valuing intangible assets
- Understanding the value of your business
- Identifying corporations who can pay premium value
- Finding strategic buyers who are motivated to pay for future results (Blue Sky)
- Getting multiple buyers multiple buyers to the negotiation table
- Preparing the proper documentation
- Structuring deals to your advantage short and long term
Pass on your Values
Selling your business doesn't have to mean selling out. You must generate interest with more than one to land with a buyer who will continue to implement your principles and practices.
We work one-on-one with business owners to help you find the ideal buyer. We are well networked and maintain an ever-growing database of qualified business and corporate buyers.
Only 25% of the business owners have an Exit plan. You need a plan, Period!
When selling your business, you need to make sure the business continues to run at optimum levels. This means Working in the Business 75% of the time. The other 25% of your time should be working on the Business which is to begin to remove yourself from the business. Absentee owners create higher value, in order to maximize the value of your business, owners have to disassociate themselves from the business and have customers, employees and suppliers sign on because of the business and not the owner. The best method to remove yourself from the business is to train your top staff to take on your responsibilities. The more people, processes and infrastructure you have, the more valuable your business.
Reduce the amount of personal perks you take from the business – Many small business owners” live” out of their businesses. Buyers will pay you handsomely for profits, but if you keep taking money out of the business for personal expenses you will automatically increase your expenses and therefore reduce your profits. The best advice here is to separate your personal and business expenses and don’t keep fging out your business debit card for family dinners, vacations, cars etc.
1) Quantify Your Business Value
No one will buy your business without knowing its worth. You need to identify which assets to include or exclude from the sale. You also have to list your risks. Then you'll have a better idea of the value of your business. It may not be worth as much as you'd expect. Completing a Valuation with a licensed professional will result in a realistic idea about price expectations and goals to meet with your exit strategy.
In addition to what your taxes, P&Ls, Balance Sheets say, there can be soft value found in intangible assets which can forecast Blue Sky value. The kind strategic buyers pay higher multiples for.
Partial list tangible and intangible Assets we will incorporate into the value proposition:
Advertising Campaigns Know-how
Advertising Materials Licenses
Backlog of Orders Technology
Branding Mailing lists
Computer Databases Management
Contractor Network Signature Projects
Contracts Name Recognition
Delivery Systems Patents
Trademarks Proprietary and system designs
Recession-resistant industry Experienced Staff
Reputation Government programs
Supplier and distributor base Growing industry
Systems and training procedure
2) Eliminate Worthless Inventory and Debtors
No one wants a business with out-of-date stock. So, if you want to sell your business, get rid of it. Same with long-term non-payers. Make them an offer they can't refuse or write them off. Both outdated inventory and debtors weigh down a sale
3) Straighten Financial Records
Buyers want the facts, and they will be asking scores of financial questions. You must be prepared to answer everything and anything about the reporting end of your business. This includes balance sheets, assets and liabilities and the taxation position. They all need to be clean and ready to view when you're selling your business.
4) Audit Your Books
More specifically, before you sell your business, your CPA needs to audit your business records to include extensive verification, confirmation, and performance. An evaluation of internal controls can be considerable help to both you and the buyers
5) Strengthen Legal and Contractual Affairs
Buyers will also have many legal questions when you sell your business. What is the ownership and structure of your business? Have you been compliant with the regulations for your particular business? What contracts do you have with customers and vendors? What is their status? What is outstanding?
6) Install and Improve Systems
Owners are the main source for daily operations. Unfortunately, such details are often only stored in their brains. Department manuals are a big plus when you're trying to sell your business. These how-tos do not have to be long and complicated. You need just enough to cover the basics and relieve your potential buyers' anxieties about your absence. DVDs are a growing trend to communicate operations.
7) Prepare and Include Your Key Management Team
Even better than the written manuals is having someone in place who can personally answer questions. In larger firms, the buyer wants to know what manager(s) will help with the transition. Who will be the knowledge bank? How long will this source(s) be staying?
Sell your business yourself - This would take them to a commerce platform
Owners Name CLICK HERE BUTTON
Type of Company
Best Phone Number
CALUCULATE THE VALUE OF YOUR BUSINESS YOURSELF
By answering 31 questions you will receive an approximate Sellers Discretionary Earnings multiple based on your opinion. Then find your EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) This is a measure of profitability your bank uses for loan purposes. Take that annual figure of profit and add back any discretionary expenditures to it. For instance; Excessive owner salary, non-essential board or family members’ salaries, payments on a non-essential vehicles, or business real estate you personally own the business leases. Once you have added discretionary expenditures back to your EBITDA you’ll arrive at your total of SDE (seller’s discretionary earnings). Your CPA will direct you to this. Take the SDE X the multiplier as one way to gauge a selling price. Does not include Blue Sky a strategic buyer may pay for. Enter confidential SDE Multiplier page.
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Read the all the categories 1-31 first. These are weighted key factors in the health of your business now and in the future. Then go back to 1. and read each category separately then answer what your real opinion answer is. a.b.c. then click on your answer. You won’t receive your multiplier unless you answer all the questions. Start here.
Step 2 – Ask your financial expert to help you complete the sellers Discretionary Earning Spreadsheet.
Step 3 – Ask Your financial expert to input from your internal audit or CPA or tax prepared
Tom Kaul, President and Councilman of Exit Strategy Planners
Tom Kaul is the President/Councilman of Exit Strategy Planners. ESP is a collaborative organization dedicated to counseling both buyers and sellers, causing transformation by effective transactions of middle market merger and acquisition advisory services.
Tom has over 40 years of experience in business transitions, sales, marketing, and entrepreneurship. He provides Mergers & Acquisition Advisory Services to private business owners. Tom is a successful Business Broker, Exit Planning Consultant, and Entrepreneur. To date, he has launched and managed three of his own successful companies and been and advisor in over 100 private company transitions.
Tom received a Bachelor’s degree in Business Administration from St. Cloud State University. He creates strategic presentations at the University of St. Thomas Schulze School of Entrepreneurship and is a trusted advisor for their Family Business Center.
In his free time, Tom enjoys spending time with his wife Helen and their 6 children and grandchildren, antique autos and boats, rowing, gardening, downhill and cross country skiing, bible study, as well as helping people in recovery.
Thomas Kaul | President/Councilman
Exit Strategy Planners
Causing Sustainable Business Transitions and Transactions!
215 Walker Avenue South | Wayzata, MN 55391
Direct Office: 952-405-2871 | Cell: 952-688-2280