Issue 185- 4/15/2010 9:00:00 AM- The Gap Between You And A Successful Exit: Do You Know Yours?
In the last several issues of this newsletter, we introduced you to Peter Daniels, a business owner who would like to leave his food processing business in five years. Let's review what we know so far.
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Issue 184- 4/1/2010 9:00:00 AM- Recent SBA's Rule Changes Make Exit Possible For More Owners
In the past few issues of this newsletter we argued that the primary benefit of planning your business exit well before your target departure date is that you need time to close the gap between what your business is worth today and the purchase price that will yield a secure retirement. We will return to that discussion in our next issue when we begin a series of articles about actions you can take today to increase the value of your company.
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Issue 183- 3/15/2010 9:00:00 AM- Quantify Your Resources: The Ultimate Exit Test
In the previous issue of this series on avoiding procrastination (related to your business exit), we talked about why all owners-whether ready or not to exit-must look carefully at the third of three ownership objectives: How much cash will you need from the sale of the company to enjoy a financially secure post business life?
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Issue 182- 3/1/2010 9:00:00 AM- Set Your Exit Objectives...Even If You Are Not Ready To Exit
Remember Peter Daniels, our perennial procrastinator? In 2005 Peter Daniels wanted to leave his food processing plant in five years by selling it for enough cash to maintain a comfortable lifestyle. A quick review of the company's financials suggested that with a current annual cash flow of $250,000, before his salary of $250,000, the company would be valued around $1 million. Peter's advisor suggested creating and implementing a step-by-step roadmap to increase value, minimize taxes, and protect existing value from loss, and Peter agreed, but did nothing more. Peter never designed an exit plan nor did he ever implement one.
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Issue 181- 2/15/2010 9:00:00 AM- Can You Work Any Harder?
In the last issue of this newsletter, we urged you to make 2010 the year that you start to get yourself and your business ready for the day you sell or transfer it. We promised to help you to do that by suggesting a series of achievable steps that you could take to change your focus to working on, rather than working in your business.
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Issue 180- 2/1/2010 9:00:00 AM- A Good Year to Avoid Last Year's Mistakes
A month ago, we turned the calendar page on a new year. By now, we have all read and considered countless suggestions on how best to resolve to change our lives, our outlooks and our waistlines.
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Issue 179- 1/15/2010 9:00:00 AM- Problem: The Loss of Key Talent—You! / Solution: The Buy/Sell Agreement
In the previous issue of this newsletter, we used the example of Rick (the dad) and Josh (the son) White to illustrate the financial problems that can occur if the "big bucks" owner of a company dies first. An equally serious problem can arise if the co-owner who is key to running the company dies.
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Issue 178- 1/1/2010 9:00:00 AM- Problem: Company's Loss of Financial Resources / Solution: The Business Continuity Agreement
Rick White and his son Josh thought they had done everything necessary to preserve their business (Great White Way) in the event one of them died. They created a buy/sell agreement, provided for an accurate valuation and fully funded the arrangement with life insurance on each other's lives.
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Issue 177- 12/15/2009 9:00:00 AM- Do You Really Need A Buy/Sell Agreement?: Part II
In the last issue of this newsletter, we presented a number of reasons why a business continuity (or buy/sell) agreement can be one of the single most important documents that you, as a closely held business owner, will sign.
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Issue 176- 12/1/2009 9:00:00 AM- Do You Really Need a Buy/Sell Agreement?: Part I
In our last issue of this Newsletter, we discussed the problems that can arise if a business continuity (buy/sell) agreement designed for one event (usually the death of a shareholder) is called upon to manage the more likely event of a shareholder's departure during his or her lifetime. Lifetime departures may occur due to the retirement, termination, divorce or bankruptcy of an owner.
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Issue 175- 11/15/2009 9:00:00 AM- Your Buy/Sell Might Be Great If You Die, But What Happens If You Don't?
If you share ownership of your company with another person, you likely have a buy/sell (or business continuity) agreement. Generally, owners draft those agreements because they want to control the transfer of ownership should one of them die or become disabled. Most agreements are set up so that life insurance will fund the purchase of the deceased/disabled owner's interest if one of these events occurs.
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Issue 174- 11/1/2009 9:00:00 AM- Issue 174: Business Continuity Planning: What Difference Does It Make?
None of us likes to think about what might happen to our businesses or our families if we were to die or become disabled. Owners who do let that thought cross their minds stay awake nights worrying about it, push the thought to the back of their minds or engage in serious business continuity planning.
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Issue 173- 10/15/2009 9:00:00 AM- Issue 173: When Selling to Insiders Cash Is King
If you contemplate transferring your business to an insider (employees, children or co-owner) and you want to get paid the value of your business, then, generally speaking, the value of your business cannot exceed four times or five times the true cash flow of the business.
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Issue 172- 10/1/2009 9:00:00 AM- Issue 172: Does a Transfer to Insiders Suit Your Objectives?
As we've discussed in the previous issues of this newsletter, insider transfers are not only doable, but, when compared to outside sales, they may be more likely, less risky and more lucrative than many owners imagine. Doable, less risky and more lucrative for whom? Let's look at owners whose objectives might be met by transfer to insiders.
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Issue 171- 9/15/2009 9:00:00 AM- Time is Essential in the Transfer to Insiders
In this series of articles about transfer to insiders, we identified a number of elements that are part of the well-designed transfer to insiders. The first element we identified was the qualifier: Time.
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Issue 170- 9/1/2009 9:00:00 AM- Issue 170: Elements of a Plan to Sell to Insiders
In the previous issue of this newsletter, we compared the attributes of sales to third parties to those of transfers to insiders. We looked at the often-overlooked risk involved in third party sales and the equally overlooked benefit of owner control and payoff in insider transfers.
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Issue 169- 8/15/2009 9:00:00 AM- Issue 169: Can You Sell Your Company to An Outside Third Party?
We talk to business owners every day who “plan” to exit their companies via a sale to a third party because they believe that they'll get more cash up front (and more overall) than if they sell their companies to insiders (family members or employees). Consequently, they believe there is far less risk selling to a third party sale than to insiders.
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Issue 168- 8/1/2009 9:00:00 AM- Time: Too Much or Too Little?
Active business owners seldom slow down. We all know that the only things likely to reduce your pace are death or terminal burn-out. This is not to imply that you are not well intentioned; quite the contrary. You are so well intentioned that you've taken on more tasks than you can possibly complete.
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Issue 167- 7/15/2009 9:00:00 AM- Issue 167: "Indecision: The WRONG Decision"
“I haven't decided what I ultimately want to do with my business, or when I want to exit, or how much money I'll need, or whom to sell to, so how can I plan my exit? Besides, I don't want to exit right now.” If you've said this, or thought it, you are not alone. Many business owners are either overwhelmed with the thought of exiting or are so busy fighting daily business fires that they think they cannot plan their exits.
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Issue 166- 7/1/2009 9:00:00 AM- Announcing a Tool for Business Owners: Meet Today's Challenges and Exploit Today's Opportunities
Over the past few months we have shared with you a number of ideas about how you and your company can approach both the challenges and the opportunities that this economy has thrown at all of us. We've discussed specific issues such as fraud, and more general issues such as preserving value, focusing on cash flow, increasing revenue and keeping all actions consistent with your ultimate goal: leaving your company when you want, to the successor you choose, for the amount of cash you want or need.
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Issue 165- 6/15/2009 9:00:00 AM- Issue 165: Fraud - Do You Know It when You See It?
The subject of employee dishonesty is a delicate one. Owners generally want to trust their employees, and given all the other battles owners fight on a daily basis, they are often not as vigilant as they can or should be. Vigilance requires an investment of time and money in return for an uncertain payoff. So let's look at a typical fraud scenario.
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Issue 164- 6/1/2009 9:00:00 AM- Issue 164: Preserve and Protect Your Business on All Fronts
We kicked off our discussion with the final item — creating value — because today, most owners are so focused on cutting expenses and minimizing risk and taxes that they've ignored their ultimate goal: creating a company with enough value to leave it for an amount of money that will support them — in style — for the rest of their lives.
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Issue 163- 5/15/2009 9:00:00 AM- Issue 163: Tough Times Crown Cash Flow as King
In the previous issues of this newsletter, we outlined two of the four areas where business owners who want to both survive in today's economic climate and emerge from it poised for growth (or sale) can focus their energies. As you may recall, the areas we have already talked about are creating value and creating revenue. Today, we discuss the third area: quantifying cash flow.
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Issue 162- 5/1/2009 9:00:00 AM- Issue 162: Increasing Revenues During Tough Times
In the previous issue of this newsletter, we discussed the critical importance of creating value in your company - even during tough economic times. Why should you worry about creating value when you've got more pressing fires to fight? Well, if you hope to sell or transfer your company when tough times end, your company must be valuable enough to attract a buyer and to finance a comfortable life after the sale.
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Issue 161- 4/15/2009 9:00:00 AM- The Exit Planning Review: Issue 161: While Managing Short-Term Issues Don't Forget Your Endgame!
In the previous issue of this newsletter, we outlined the four areas where business owners who want to both survive in today's economic climate and emerge from it poised for growth (or sale) can focus their energies. As you may recall, those areas are:
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Issue 160- 4/1/2009 9:00:00 AM- Issue 160: Designing Smart Strategies to Meet Today's Economic Challenges
During the past several months, we have been helping business owners meet the challenges presented by recent changes in the economy. In this and the next several issues of The Exit Planning Review™ we will share with you what we are learning from owners and their advisors across the U.S. about which strategies are most effective. Before we begin, however, we hope you will share with us how your company has been affected, how you are responding, and how we can help you meet those challenges.
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Issue 159- 3/15/2009 9:00:00 AM- Issue 159: Economic Downturn Gives Owners Time to Prepare for the Recovery of the M&A Market
The current recession has given all business owners, quite literally, pause: pause in growth, pause in hiring, pause to reconsider exactly where our companies are heading — or need to head — if we are to meet our owner-based goals.
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Issue 158- 3/1/2009 9:00:00 AM- Issue 158: Economic Downturn Gives Owners Time to Work on Value Drivers
In a strong Merger & Acquisition (M&A) market, buyers compare the relative strength of your company's value drivers to those of your competitors. In today's M&A market, however, buyers want companies that possess all of the characteristics of a well-run business. Additionally, tighter credit forces buyers to use more of their own capital to buy businesses so they look for acquisitions that carry minimal business risk. Companies with strong value drivers in place carry less risk. Companies lacking one or more value driver(s) simply will not attract interested buyers. This harsh reality means most owners have a lot of work ahead.
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Issue 157- 2/15/2009 9:00:00 AM- Issue 157: Time to Figure Out What You Need from the Sale of Your Company
The recession has brought a lot of challenges, but it has also brought the luxury of time: time to figure out exactly what you need from the sale or transfer of your company to support a comfortable post-sale lifetime and time to create enough value in your company to achieve your desired sale price.
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Issue 156- 2/1/2009 9:00:00 AM- Issue 156: Will Your Future Look Like Today?
Near the end of 2008, we noted that the economic downturn had forced many owners to postpone their plans to exit their companies. We then looked at the several actions owners could take to respond to that delay.
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Issue 155- 1/15/2009 9:00:00 AM- Issue 155: Should You Sell Your Company Now?
Should you sell your company now? Not only does the answer depend on you (how much fire you've got left in your belly) and on your exit goals (can a sale achieve your retirement needs?), it also depends on what you've got to sell, what industry you are in and M&A market conditions in your market segment.
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Issue 154- 1/1/2009 9:00:00 AM- Issue 154: Want to Build Business Value in a Recession? Think: Acquisition
In an economy when many of us are tempted to bury our heads until the shooting is over, smart business owners are realizing that this may be the perfect time to acquire smaller, less adaptable, less capitalized or less well-managed competitors.
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