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Is my business salable
- 1. Is my business salable? By Peter Busacca, Washington BBI Washington BBI Slide: 1
- 2. Is selling my only exit option? • Dissolution / Liquidation • Null exit – create a cash cow and milk it from afar • COB Emeritus – shows up quarterly to bark • License the IP or technology – • IPO – “the genie in the lamp” - every tech start-up’s dream! • Or sell the business 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you! Washington BBI Slide: 2
- 3. If you want to sell, who will buy? Five types of buyers 1.Family Member 2.Employees 3.Competitor 4.Investor: a) Individual? b) PEG? 5.Strategic Buyer Washington BBI Slide: 3 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 4. What keeps buyers up at night? An individual buyer’s biggest fear is that they will totally mess up! Washington BBI Slide: 4 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 5. What do buyers look for? Attributes that entice: • Earnings history • Viable business model • Strong management team • Proven market • Proven processes & systems • Proven client relationships • Strategic value Washington BBI Slide: 5 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 6. Strategic value? • Ability to plug holes in their product line or strategy • Capacity: Manufacturing or Distribution • Intellectual Property & Processes • Leadership team & employee talent • Location, location, location • Process: Manufacturing or Distribution • Product attributes • Product: complementary sales • Product: cross-sell opportunities • Purchase material discount opportunities • Secure customer base • Secure vendor relationships • Territory / Protected Markets Washington BBI Slide: 6 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 7. Investors won’t kiss a pig! What symptoms warn investors off? • Inconsistent earnings over past 5 years? • No business plan? • Poor targeting and execution? • No or poor management team? • Financials no one can trust? • Unreported cash? • Personal expenses on the firm’s P&L? • No exit or business transition plan? • Poor sales/marketing execution? • No or bad operations or systems? • No clear idea of what they are good at? Washington BBI Slide: 7 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 8. Why exit plan? Who cares? • Customers, Vendors & Investors: • Want to do work with firms that will succeed. • Lenders: • Want to believe they will be paid back. • You: • Remember the balance beam? • Eyes on the destination, you’ll succeed. • Eyes on your toes – you will fall. Exit planning helps owners to focus & to achieve goals Washington BBI Slide: 8 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 9. Benefits of exit planning • Focus on the destination and you will achieve it. • Maximize business value and make more money. • Reduce aggravation. Execute better. Sleep better. • Reduce BSO Syndrome to manageable levels. • Make your business enticing to: • Investors • Bankers • Customers • Business buyers! Washington BBI Slide: 9 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
- 10. Thank you! Peter Busacca, MBA Washington BBI Consulting@WashingtonBBI.com www.washingtonbbi.com 425/391-8720 Business transitions and transactions - the business brokers with the end-to-end solution! Washington BBI Slide: 10 1. Title 2. Exit options 3. Buyer types 4. Buyer’s fears 5. Strategic buyers 6. Attributes 7. Kissing pig 8. Exit plans 9. Value of exit planning 10.Thank you!
Editor's Notes
- The balance beam is a great metaphor for the value of exit planning, and exit planning, at least in this context, is all about making your business enticingly salable. If you focus on the exit, you will likely get there. Focus on your toes, and what happens?
- Alfred E. Neuman was the mascot for people with no plan. He would not exit plan. What about you? What are your options for exiting?
- If you intend to sell your business, who will you sell to? There five types of buyers. Period. Which is right for you? How do you prepare your business for sale for each type? Which one will pay the most for your business? Why?
- If your business is mid-sized or larger, then another, larger firm will likely buy it. If you have a small business, then another individual is likely to buy it. Anything sellers can do to proactively reduce the buyer’s worries will make your business more enticing for sale. It may even increase the price paid.
- When buyers put your firm under the microscope, what do they look for?
- Firms with strategic value command above-market selling prices. What do you need to do to show future buyers that your company offer proven and exceptional strategic value?
- Buyers don’t want to kiss pigs. Is your business enticing? If not, get help from consultants or business brokers you can trust.
- Ever feel like yours insides just want to scream? Exit planning can help. It is all about 1) building value over time, and 2) preparing your business to be salable to the kind of buyer your want to sell to. There are side benefits. Customers, vendors and enders want to do business with people who know where they are going. Exit planning helps owners to focus and succeed.
- Here are some of the benefits of exit planning. They all boil down to increasing value and efficiency as well as reducing aggravation and distractions.
- It has been an honor to speak with you today. Thank you for your time and attention.