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Protecting Your Business Nest Egg
Copywrite 2015 B2BPlanner Ltd.
You have one chance to get it right
We will discuss
Why Plan
Why Now
Why You
Key Planning Considerations
We will not discuss
Valuing a business
Selling a busi...
Founded 2003
Meet my client:
Let’s call him Dr. V.
He started a business in 2003.
World renowned in his field
Lead technic...
 Formal operating agreement addressing transfer of
ownership on death to partners
X Debt to a minority shareholder
Did no...
Why Didn’t Dr. V
Plan for Transition?
 Denial of his mortality
 Fear of losing identity
 Fear of an unknown future
 Di...
 Debilitating illness or death
 Divorce
 Inheritance by family
 Sale of business to a third party
 Transfer to a busi...
Planning To Sell?
Getting out is harder than getting in
5 million
businesses
Will go up for
sale in the next
5 years
Today...
Planning To Sell?
5 million
businesses
Will go up for
sale in the next
5 years
1 in 10 may sell
in the future
Of available...
40% of Owners Plan For Their Kids To Take Over … but
Only
30% of inherited
businesses survive
into the second
generation
P...
What Is At Stake?
60% of
Owners
Do not know
The true value
of their
business
80% of
owners
have
over 50% of
their wealth i...
How Do You Like The Odds?
You CAN change them with a transition plan
The FACT is…
Successful transition plans have PAID the owners
$1000-2000 PER HOUR for the time they invested
in developing...
0 2 4 6 8
<$499K
$500K - $1 M
$1M - $2M
$2M- $5M
$5M - $50M
2.6
2.9
4.3
4.5
5.4
Average EBITA Multiple
EBITA Multiple for ...
Business risk exposure
economy, industry, competition
Future Growth Potential
Business “resilience” and stability
industry...
What Position Do You Play?
Business
Owner
Business
Lawyer
Accountant
Business
Broker
Financial
Planner
Business
Advisor
Tr...
Assess Plan Execute
Planning Can Be Done In 6 Months
Phase III
45-60 Days
• Inventory
competencies
• Individual
developmen...
Successful Execution Can Take Years
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Form Team
Fact Gathering
Forecasting
...
As the transition approaches, business
moves from being an income stream to
becoming a wealth generating asset
6 Steps To A Successful
Business Transition
1. Build Your Team
2. Determine Your Required Net Proceeds
3. Get A Realistic ...
Succession Planning
happens at every stage
of a business’s life-
cycle…
www.ohiobusinesshelp.com/business-transition
art@OhioBusinessHelp.com
937-895-0481
I am committed to preserving
Entreprene...
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Selling A Business: Why A Transition Plan Is Essential

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Selling a business will become more difficult in the next 5 years as baby boomers flood the market with an estimated $10 trillion worth of businesses. It is projected that there is only $1 trillion of investment available from investors interested in purchasing small businesses. This makes it essential to develop and execute a business transition plan that will allow business owners to access the wealth they have built up in their business. This may not mean selling the business, but finding a creative way to transition the business over time for the greatest return.

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Selling A Business: Why A Transition Plan Is Essential

  1. 1. Protecting Your Business Nest Egg
  2. 2. Copywrite 2015 B2BPlanner Ltd. You have one chance to get it right
  3. 3. We will discuss Why Plan Why Now Why You Key Planning Considerations We will not discuss Valuing a business Selling a business Legal or financial details
  4. 4. Founded 2003 Meet my client: Let’s call him Dr. V. He started a business in 2003. World renowned in his field Lead technical person in the company A few years ago he got cancer and died. I was advising the owners at the time This transition was Unplanned Very difficult and stressful Risked the company’s survival I want you to avoid this situation in your business or with your clients
  5. 5.  Formal operating agreement addressing transfer of ownership on death to partners X Debt to a minority shareholder Did not have: X Key man insurance X Team of advisors X Business continuity plan X Staff Succession plan X Knowledge of family about the business 2 year federal research grant from NSF  Business advisor able to step in to run business What Happened?
  6. 6. Why Didn’t Dr. V Plan for Transition?  Denial of his mortality  Fear of losing identity  Fear of an unknown future  Didn’t have the time ? Excuses: “It’s too early to plan” (and execute) “The process is too complicated/expensive”
  7. 7.  Debilitating illness or death  Divorce  Inheritance by family  Sale of business to a third party  Transfer to a business partner  Sale to the management team  Business Merger  Just shutting down! Transitions to Consider
  8. 8. Planning To Sell? Getting out is harder than getting in 5 million businesses Will go up for sale in the next 5 years Today Only 1 in 4 businesses for sale are sold
  9. 9. Planning To Sell? 5 million businesses Will go up for sale in the next 5 years 1 in 10 may sell in the future Of available Capital To buy small businesses
  10. 10. 40% of Owners Plan For Their Kids To Take Over … but Only 30% of inherited businesses survive into the second generation Planning for Inheritance? 12% survive into the 3rd generation!
  11. 11. What Is At Stake? 60% of Owners Do not know The true value of their business 80% of owners have over 50% of their wealth in their business 70% do not have a succession plan!
  12. 12. How Do You Like The Odds? You CAN change them with a transition plan
  13. 13. The FACT is… Successful transition plans have PAID the owners $1000-2000 PER HOUR for the time they invested in developing their plan .
  14. 14. 0 2 4 6 8 <$499K $500K - $1 M $1M - $2M $2M- $5M $5M - $50M 2.6 2.9 4.3 4.5 5.4 Average EBITA Multiple EBITA Multiple for SCORE >80 Increased Selling Value Based on EBITA By Increasing “Sellability” Source: “Built To Sell”, 2012
  15. 15. Business risk exposure economy, industry, competition Future Growth Potential Business “resilience” and stability industry, size, geographic location Business performance Availability of financing Ownership structure Factors Impacting “Sellability”
  16. 16. What Position Do You Play? Business Owner Business Lawyer Accountant Business Broker Financial Planner Business Advisor Transition Coach Family Estate & Tax Planning Transition Planning is a “team” sport The team …
  17. 17. Assess Plan Execute Planning Can Be Done In 6 Months Phase III 45-60 Days • Inventory competencies • Individual development • Accountability • Measure Phase II 45-60 Days • Future Goals • Gap Analysis • Performance management • Action Plan Phase I 30-60 Days • Owner Commitment • Establish Team • Baseline Assessment
  18. 18. Successful Execution Can Take Years Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Form Team Fact Gathering Forecasting Personal Needs Valuation Set Objectives Transition Plan Management Development Building Value Ownership transfer Additional Payouts
  19. 19. As the transition approaches, business moves from being an income stream to becoming a wealth generating asset
  20. 20. 6 Steps To A Successful Business Transition 1. Build Your Team 2. Determine Your Required Net Proceeds 3. Get A Realistic Valuation And Transition Cost Estimate 4. Develop a Formal Transition Plan 5. Plan to Minimize Taxes and Fees 6. Improve the Business to Close any Gap
  21. 21. Succession Planning happens at every stage of a business’s life- cycle…
  22. 22. www.ohiobusinesshelp.com/business-transition art@OhioBusinessHelp.com 937-895-0481 I am committed to preserving Entrepreneurial wealth. Contact me to discuss your situation. Art Helmstetter

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