Effectively Planning an Exit or Transition: Part II

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90% of the owners of closely held companies who are over 55 don't have a formal exit plan. They don't know what their personal strategy is and haven't put together a business strategy to support their needs when they exit the business.

It is a complex and somewhat emotional issue. This presentation breaks the process down into its fundamental elements and the priority of the activities an owner must undertake to have a well thought through exit plan.

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Effectively Planning an Exit or Transition: Part II

  1. 1. TRANSITIONING OR EXITING YOUR BUSINESS What needs to be done to achieve your vision and strategies 1
  2. 2. • According to a 2008 study conducted by Atlanta based White Horse Advisors  and Vistage International, 96 percent of boomer business owners agreed that  having an exit strategy was important — but 87 percent did not have a written  plan.  29% of owners believe they have an adequate group of advisors to help them plan their exit or  transition  50% of privately held businesses in the study were over $11 million in gross  sales • Transitioning to a new role or exiting their business can be a very stressful  activity that requires a 3‐5 year window to properly plan and implement  Disagreements with partners  Lack of support from employees  Dizzying array of methods and options to exit or transition  Transition planning or exiting the business through proactive planning and  leadership can provide significantly higher enterprise value for privately held  companies and net worth for the owners Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential ACCELERATING ORGANIZATIONAL PERFORMANCE AND STRATEGIC EXECUTION Some Thoughts 2
  3. 3. What is your vision for you and your   company 3‐7 years from now? • Carrying on your legacy • Sell all or part, merger • Flourishing as a stand alone • Providing you with predictable and  sustainable returns in retirement • Guided by you in a new role as  Chairman, advisor or functional expert • Doing what you love to do in the  business EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition • Something else….. Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential 3
  4. 4. • There are two strategies that are required for successfully planning an  exit or transition:  The strategy for you as an owner  The strategy for your company • The strategy for you as an owner will define what will happen after  your exit or transition:  Reliable cash flows  A liquidity event  A new role doing what you love to do in the business on a part time or full time  basis  Minimizing tax consequences • The strategy for your company needs to be designed to support your  strategy     Group50 Consulting Los Angeles, CA (909) 949‐9083 Succession planning Maximizing enterprise value (EBITDA and multiple) Preparation for a liquidity event Sustainability Group50 Consulting               All Rights Reserved 2014                          Confidential EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition Strategy 4
  5. 5. Your personal exit or transition strategy needs to  focus on: Required Now: • The desires of you and your partners • Buy/sell agreement(s) • Providing flexibility to choose the type of liquidity event you want and  the timing for it 2‐ 3 years prior to an exit or transition event: • • • • Estate planning Taxation Succession Partial or full sale Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition Strategy 5
  6. 6. Company strategy needs to focus on maximizing  enterprise value.  The key components of this are: • A sound and actionable business strategy • Demonstrating EBITDA growth trends • Improving the valuation multiple by mitigating risk and targeting these  areas:         Group50 Consulting Los Angeles, CA (909) 949‐9083 Key man discount Increasing market share in growing market segments Intellectual property Reducing customer concentration Appropriate business systems:  financial and operational Organization structure Competitive differentiation Legal Group50 Consulting               All Rights Reserved 2014                          Confidential EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition Strategy 6
  7. 7. Implementing Strategy • • • • 90% of strategies aren’t effectively implemented The two required strategies are effectively coordinated Realization typically requires 3‐5 years of effort Most management teams don’t know what the owner’s long term  strategy is….  It isn’t often discussed in actionable detail Barriers to Implementation • • • • • • Lack of articulation of strategies with definable objectives Insufficient key performance indicators with a strategic focus Poorly defined tactics directed toward the strategies:  financial, legal  and operational Accountability inside the organization Long term focus The large number of experts needed to craft a viable strategy and  implement it Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition Strategy 7
  8. 8. Who helps you: • Identify the possibilities  and finalize your vision  Legal  Advisor • Create the transition  strategy Owner • Operationalize it • Fund it Financial  Advisor EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition What Is Missing? Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential 8
  9. 9. An operational advisor who can: • Help craft the long term  strategy for the owners and  the business • Identify and work with the  experts needed to implement  your plan • Project manage the strategic  implementation • Prepare the organization or  the business for the transition • Train and develop new leaders • Bring another point of view to  the table • Provide the operational tools  that every successful business  needs Group50 Consulting Los Angeles, CA (909) 949‐9083 Estate Planning Corporate Structure Funding Partner(s) Business Attorney Sell Side M&A   ‐ ESOP/MSOP Transaction attorney  ‐ Contract Attorney Legal Advisor Sell Side M&A Owner Project  Management Financial Analysis Dispute Resolution Due Diligence  Corporate Governance Wealth Management Capitalization Expert(s)/Funding Maximize Enterprise Value Funding Buy/Sell Agreements  Succession Planning,  Organizational Development Accounting  ‐ Valuation  ‐ Taxation Experts Strategic Planning and Execution Financial Advisor Group50 Consulting               All Rights Reserved 2014                          Confidential EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Planning Your Exit Or Transition Operational Advisor 9
  10. 10. Create Your Vision and Strategies Assess The Gaps From The  Current State To The Future State Create Tactics to Deal With The  Gaps Tactical Execution Articulating your vision  and strategies provides a  roadmap for all the  stakeholders in your  business and the various  experts you need to  follow and be  accountable EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Four Steps To Achieving Your Vision  Consider Getting Started With A Transition Assessment That  Results In Creating The Roadmap Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential 10
  11. 11. • Assessment  Work with you and your legal and financial advisors to finalize your vision and  strategy  2‐4 days depending on the size of your business utilizing interviews and  operational audits  Identify the gaps • Create the roadmap   Provide the actions needed to satisfy the end game Develop a timeline • Define where you need additional resources to implement your  vision and strategy • Contact Jim Gitney, CEO of Group50 at 909‐949‐9083 or email him at  jgitney@group50.com We work with company owners to effectively define and implement  their personal and business strategies and accelerate performance Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2014                          Confidential EFFECTIVELY ACHIEVING YOUR VISION AND STRATEGIES TO TRANSITION Group50’s Approach 11
  12. 12. We work with company owners to effectively define and implement their personal and  business strategies and accelerate performance • A ten year old consulting company that specializes in:  Exit and Transition Planning  Strategic Execution  Maximizing Enterprise Value • Headquartered in Los Angeles with over 20 consultants throughout the United  States  All former operating executives from world class companies such as GE, Black & Decker, Avery  Dennison, Apple Computer, Morgan Stanley, Fidelity, AT&T and others  Most have held C‐Level positions including Chairman, Board Member and Advisory Board  Consultants who are fluent in over 10 languages  • Areas of Expertise       Strategy and its execution Operations  Continuous improvement (Six Sigma, Kaizen, PMO) Corporate Finance Manufacturing and Distribution Coaching and mentoring business owners • We provide our clients with support services as:  Consulting resources, Project and Program managers  Interim Executives   Board members and Advisors Group50 Consulting Los Angeles, CA (909) 949‐9083 Group50 Consulting               All Rights Reserved 2012                          Confidential ACCELERATING ORGANIZATIONAL PERFORMANCE AND STRATEGIC EXECUTION A Bit More About Group50® 12

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