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Course Slides: Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold.  Tilt the field in your favor and sell your business for top dollar.
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Course Slides: Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold. Tilt the field in your favor and sell your business for top dollar.

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Course Slides: Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold. Tilt the field in your favor and sell your business for top dollar.

Course Slides: Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold. Tilt the field in your favor and sell your business for top dollar.

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  • 1. Data Collection – interview with owner, detailed questionnaire, review of data, research 2. Valuation / Analysis – business valuation, personal financial plan, ways to maximize value of business, tax strategies 3. Recommendations – salability of business, financial terms, exit options, ways to maximize value and minimize taxes, legal options, specific action plans 4. Implementation – pre-transaction due diligence, tax plan, estate plan, wealth management plan, business & marketing strategy, implementation of appropriate exit option
  • 1. Data Collection – interview with owner, detailed questionnaire, review of data, research 2. Valuation / Analysis – business valuation, personal financial plan, ways to maximize value of business, tax strategies 3. Recommendations – salability of business, financial terms, exit options, ways to maximize value and minimize taxes, legal options, specific action plans 4. Implementation – pre-transaction due diligence, tax plan, estate plan, wealth management plan, business & marketing strategy, implementation of appropriate exit option
  • 1. Data Collection – interview with owner, detailed questionnaire, review of data, research 2. Valuation / Analysis – business valuation, personal financial plan, ways to maximize value of business, tax strategies 3. Recommendations – salability of business, financial terms, exit options, ways to maximize value and minimize taxes, legal options, specific action plans 4. Implementation – pre-transaction due diligence, tax plan, estate plan, wealth management plan, business & marketing strategy, implementation of appropriate exit option
  • 1. Data Collection – interview with owner, detailed questionnaire, review of data, research 2. Valuation / Analysis – business valuation, personal financial plan, ways to maximize value of business, tax strategies 3. Recommendations – salability of business, financial terms, exit options, ways to maximize value and minimize taxes, legal options, specific action plans 4. Implementation – pre-transaction due diligence, tax plan, estate plan, wealth management plan, business & marketing strategy, implementation of appropriate exit option
  • 1. Data Collection – interview with owner, detailed questionnaire, review of data, research 2. Valuation / Analysis – business valuation, personal financial plan, ways to maximize value of business, tax strategies 3. Recommendations – salability of business, financial terms, exit options, ways to maximize value and minimize taxes, legal options, specific action plans 4. Implementation – pre-transaction due diligence, tax plan, estate plan, wealth management plan, business & marketing strategy, implementation of appropriate exit option

Course Slides: Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold.  Tilt the field in your favor and sell your business for top dollar. Course Slides: Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold. Tilt the field in your favor and sell your business for top dollar. Presentation Transcript

  • Top 7 Reasons Why 3 out of 4 Businesses Won’t Ever Be Sold Tilt the field in your favor and sell your business for top dollar Erik Bunaes, Principal & President, Endorphin Advisors September 16, 2010 © 2010 Endorphin Advisors - All Rights 1 Reserved
  • Course Overview  Businesses Sales Data  Top 7 Reasons Why Businesses Are Not Sold  Introduction to Exit Planning  Exit Planning Process  Professional Exit Planning Advisory Team  20 Criteria that Attract Buyers  Where to Start - 16 Steps to Get Process Started September 16, 2010 © 2010 Endorphin Advisors - All Rights 2 Reserved
  • Businesses sold in U.S.  Less than $750K revenue - 18% are sold  $750K - $2M revenue - 25% are sold  $2M - $30M revenue - 29% are sold  $30M+ revenue - 33% are sold Higher revenue = increased chances of sale Source: CABB & Tom West September 16, 2010 © 2010 Endorphin Advisors - All Rights 3 Reserved
  • Top 7 Reasons why some businesses are never sold 1. Poor books, records & data (#1 obstacle to selling a business) 2. Poor profitability or decreasing revenue (poor competitive position in market, uncompetitive products, ineffective marketing, etc.) 3. Weak (or non-existent) business & marketing plans 4. Owner is the business (weak or no management team, unstructured business processes, licensing issues) 5. Not prepared for due diligence process 6. Inadequate (disadvantaged) lease or uncooperative landlord 7. Owner uncommitted to selling (seller inflexible in structuring deal, uncertain about financial needs, no plans for life “post sale” September 16, 2010 © 2010 Endorphin Advisors - All Rights 4 Reserved
  • What is Exit Planning? Exit Planning is a comprehensive plan of action where business owners ask and answer all critical business, personal, financial, legal and tax questions involved in selling and exiting a business on their own terms. Creating an effective Exit Plan involves a wide range of issues, topics and areas of expertise - and potential pitfalls - where success is best achieved with the assistance of professional, experienced advisors and experts. September 16, 2010 © 2010 Endorphin Advisors - All Rights 5 Reserved
  • Exit Planning Process Exit Planning covers four broad steps: 1. Data collection 2. Valuation & Analysis 3. Strategy & Recommendations 4. Implementation & Execution September 16, 2010 © 2010 Endorphin Advisors - All Rights 6 Reserved
  • Step 1 - Data Collection 1. Initial Meeting 2. Questionnaire to gather information and assess situation, goals and needs 3. Interview 4. Review 5. Research September 16, 2010 © 2010 Endorphin Advisors - All Rights 7 Reserved
  • Step 2 – Valuation & Analysis 1. Current, certified business valuation 2. Owners long-term financial needs & plan 3. Develop, implement strategies to maximize value of business prior to a sale 4. Tax strategies (we cannot underestimate the significant impact that effective tax planning can have on the post-sale financial gains) September 16, 2010 © 2010 Endorphin Advisors - All Rights 8 Reserved
  • Step 3 – Strategy & Recommendations 1. Market value of business, current conditions 2. Financial terms & alternatives of potential sale 3. Exit options 4. Strategies to increase value and “curb appeal” (or “salability”) prior to a sale 5. Strategies to position business for revenue growth and ensuring competitive market positioning 6. Strategies to minimize & defer taxes 7. Legal options and considerations 8. Specific action plan (who needs to do what, and when) September 16, 2010 © 2010 Endorphin Advisors - All Rights 9 Reserved
  • Step 4 – Implementation & Execution 1. Pre-Transaction due diligence (preparation for the real thing) 2. Tax & estate plans 3. Implement plan to maximize value, grow revenue and ensure competitive market position 4. Wealth management plan, needs, goals 5. Implementation of exit strategy (sale and exit of business) September 16, 2010 © 2010 Endorphin Advisors - All Rights 10 Reserved
  • Exit Planning Advisory Team 1. Investment banker, M&A advisor or business broker 2. Attorney 3. CPA 4. Wealth Management advisor 5. Estate Planning advisor (may be attorney, CPA or Wealth Management advisor) 6. Insurance professional 7. Management consultant (Endorphin Advisors provides business development and marketing strategy consulting and acts as project manager in exit planning process) September 16, 2010 © 2010 Endorphin Advisors - All Rights 11 Reserved
  • 20 Criteria That Attract Buyers (1 of 3) 1. Audited (or CPA-reviewed) financial statements 2. Accurate sales, accounting and data records 3. Copies of income tax filings 4. Low or manageable debt, receivables outstanding relative to revenue/income 5. Realistic asking price, supported by recent valuation and sales information 6. Increasing revenue trends (last 3-years) 7. No unresolved legal, liability, tax issues 8. Strong marketing strategy and plan September 16, 2010 © 2010 Endorphin Advisors - All Rights 12 Reserved
  • 20 Criteria That Attract Buyers (2 of 3) 9. Track record of profitability (3-years) 10. Strong management team (in addition to owner) and experienced employees that will stay with business 11. Appropriate HR-related practices, hiring/firing practices, disciplinary practices, performance reviews, etc. 12. Strong operational procedures and practices (documented) 13. Strong competitive marketing position & product line-up with track record of innovation 14. Appealing, organized office, store, factory or physical plant 15. Loyal, repeat customers September 16, 2010 © 2010 Endorphin Advisors - All Rights 13 Reserved
  • 20 Criteria That Attract Buyers (3 of 3) 16. Updated arsenal of marketing tools (web site, newsletter, brochures, customer lists, standard proposals, etc.) 17. Appealing competitive market environment (level of barriers to entry for new competitors) 18. Appropriate level of geographical distribution of sales (not focused in one area) 19. Strong business relationships (with vendors, partners, service providers, financial institutions, etc.) 20. No Surprises during the deal or due diligence process! September 16, 2010 © 2010 Endorphin Advisors - All Rights 14 Reserved
  • Where to Start (1 of 3) 1. Understand that successfully selling and exiting a business can take time (possibly 2-4 years) 2. Start early (even before you make firm decision to sell) and be prepared to continue working in this business for a couple more years (at minimum) 3. Get a current, certified appraisal of value for your business 4. Get appraisals for machinery, equipment and real estate (for buyer’s financing applications) 5. Outline future financial needs & goals for you and your family September 16, 2010 © 2010 Endorphin Advisors - All Rights 15 Reserved
  • Where to Start (2 of 3) 6. Create a picture and plan of what you will do with yourself after selling and exiting your business 7. Examine your business and see what you can fix up (both short term and long term fixes). Get help to get your business into it’s best possible shape 8. Start building business plan and buyer due diligence package 9. Start building team of professional advisors, all with significant experience selling businesses 10. Seek advice on factors related to business sales (comparable sales, financing availability, competitive environment, potential buyers, state of economy, etc.), and develop strategy and timeline for listing business and approaching specific, potential buyers September 16, 2010 © 2010 Endorphin Advisors - All Rights 16 Reserved
  • Where to Start (3 of 3) 11. Create concrete financial plan for investing proceeds from sale 12. Seek advice from tax attorney or CPA to develop strategies to (legally) minimize and defer taxes from sale 13. Hire experienced attorney to conduct full legal document review and inventory 14. Get your family and all co-owners on board with your plan. Create a transition strategy that includes timelines for you, senior management team, other owners, and employees (especially if family are in business) 15. Update inventory, write off expired inventory and uncollectible debts, pay down (or pay off) outstanding debt 16. Maximize profits by reducing unnecessary expenses and perks. September 16, 2010 © 2010 Endorphin Advisors - All Rights 17 Reserved
  • Discussion Review  Business Sales Statistics  Top 7 Reasons Businesses Don’t Sell  Introduction to Exit Planning  Exit Planning Process  Professional Exit Planning Advisory Team  20 Criteria that Attract Buyers  Where to Start – 16 Steps to Get Process Started September 16, 2010 © 2010 Endorphin Advisors - All Rights 18 Reserved
  • Thank You Erik Bunaes, Principal & President Endorphin Advisors Phone: 415.578.0064 Email: Erik@EndorphinAdvisors.com Web: www.EndorphinAdvisors.com Endorphin Blog: http://blog.endorphinadvisors.com www.facebook.com/EndorphinAdvisors www.linkedin.com/in/erikbunaes www.youtube.com/user/endorphin1995 September 16, 2010 © 2010 Endorphin Advisors - All Rights 19 Reserved
  • About Endorphin Advisors See www.EndorphinAdvisors.com Endorphin Advisors is a unique, boutique management consulting firm and marketing agency. We help businesses develop and implement short and long term strategicstrategic plans, often in preparation for certain defined events such as acquisitions, mergers, acquisitions, capital raising events, business start-ups, adding staff, launching new products or start- services or selling the business itself. Started in 2005, Endorphin Advisors helps build leadership and organizational capacity and organizational provides day-to-day operational, marketing and financial consulting services. We day- to- develop innovative, visionary, operational business development and marketing strategies to help businesses grow and reach their fullest potential. We specialize in inbound marketing strategies; lead generation strategies; content development strategy and management for inbound marketing initiatives. initiatives. Endorphin Advisors also provides specific exit strategy and business certification services that provide financial, operational and leadership capacity baselines. baselines. September 16, 2010 © 2010 Endorphin Advisors - All Rights 20 Reserved