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Wayne Wilson & Company
Business Advisory Services
___________________________________________________




Business Valuati...
___________________________________________________




     Begin with the END in Mind.



Nov 2008          © Wayne Wils...
Preliminary Questions –
 Environmental/ Situational
___________________________________________________

• Is your busines...
Preliminary Questions –
 Transactional
___________________________________________________

• Are there logical buyers or ...
___________________________________________________




     Valuation is in the Eye of the
              Beholder.


Nov ...
Valuation – Factors
___________________________________________________

• Fundamentals

• Players

• Currencies



Nov 20...
Valuation – Fundamentals
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•   Revenue size
•   Revenue growth rate
•  ...
Valuation – Players
___________________________________________________

•   Strategic buyers
•   Financial buyers
•   New...
Valuation – Currencies
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•   Cash
•   Earn outs
•   Seller notes
•   St...
Monetizing Your Equity*
___________________________________________________

Some Methods for Monetizing Your Equity:
•   ...
___________________________________________________




              The Value Quadrant:
           Trading between Value...
The Value Quadrant
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           Higher   $          The Ideal


Value...
The Value Quadrant
___________________________________________________



           Higher    $
Value
                   ...
The Value Quadrant
___________________________________________________



           Higher   $                        Fin...
___________________________________________________




           A Few Case Histories:
            Situations & Solution...
Case #1 – Janitorial Svcs
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Situation                       Solution
• ...
Case #2 – Software services
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Situation                        Solution...
Case #3 – Radio Station Gp
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Situation                       Solution
•...
Case #4 – Cutting Tools
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Situation                       Solution
• Cl...
Case #5 – Construction Co.
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Situation                       Solution
•...
Case #6 – IT Reseller
___________________________________________________

Situation                       Solution
• Clos...
___________________________________________________




     Where Do YOU Want to Go?



Nov 2008          © Wayne Wilson ...
About Wayne Wilson
___________________________________________________
Wayne Wilson is the principal of Wayne Wilson & Com...
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Business Valuation & Exit Strategies: Planning for the End Game

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Business Valuation & Exit Strategies: Planning for the End Game

  1. 1. Wayne Wilson & Company Business Advisory Services ___________________________________________________ Business Valuation & Exit Strategies: Planning for the End Game A Primer for Business Owners Seeking Liquidity Nov 2008 © Wayne Wilson & Company. 1
  2. 2. ___________________________________________________ Begin with the END in Mind. Nov 2008 © Wayne Wilson & Company. 2
  3. 3. Preliminary Questions – Environmental/ Situational ___________________________________________________ • Is your business mature or still growing rapidly? • Is your industry stable, consolidating or declining? • Does the business generate excess cash or require continual investments? • Do you wish to continue working? • Is successor management in place or available? Nov 2008 © Wayne Wilson & Company. 3
  4. 4. Preliminary Questions – Transactional ___________________________________________________ • Are there logical buyers or investors? • Do you want cash now or over time? • Do you wish to retain an equity upside? • Do you have other business opportunities with greater potential? • Are there other personal, family or health issues? Nov 2008 © Wayne Wilson & Company. 4
  5. 5. ___________________________________________________ Valuation is in the Eye of the Beholder. Nov 2008 © Wayne Wilson & Company. 5
  6. 6. Valuation – Factors ___________________________________________________ • Fundamentals • Players • Currencies Nov 2008 © Wayne Wilson & Company. 6
  7. 7. Valuation – Fundamentals ___________________________________________________ • Revenue size • Revenue growth rate • Market position / share • Profitability • Management / Successor Nov 2008 © Wayne Wilson & Company. 7
  8. 8. Valuation – Players ___________________________________________________ • Strategic buyers • Financial buyers • New operators • Investors – Public – Private • Employees / Managers Nov 2008 © Wayne Wilson & Company. 8
  9. 9. Valuation – Currencies ___________________________________________________ • Cash • Earn outs • Seller notes • Stock • Combinations Nov 2008 © Wayne Wilson & Company. 9
  10. 10. Monetizing Your Equity* ___________________________________________________ Some Methods for Monetizing Your Equity: • Dividends • Hire & Retire • Recaps • Liquidate • IPOs • Sell Out • MBOs *Wayne Wilson, “7 Ways to Monetize Your Equity,” Companies in Transition, June 2007. Nov 2008 © Wayne Wilson & Company. 10
  11. 11. ___________________________________________________ The Value Quadrant: Trading between Value and Risk Nov 2008 © Wayne Wilson & Company. 11
  12. 12. The Value Quadrant ___________________________________________________ Higher $ The Ideal Value Lower Lower Higher Time / Risk Nov 2008 © Wayne Wilson & Company. 12
  13. 13. The Value Quadrant ___________________________________________________ Higher $ Value All Cash? Lower Lower Higher Time / Risk Nov 2008 © Wayne Wilson & Company. 13
  14. 14. The Value Quadrant ___________________________________________________ Higher $ Financial Buyer Leveraged Recap? Value Lower Lower Higher Time / Risk Nov 2008 © Wayne Wilson & Company. 14
  15. 15. ___________________________________________________ A Few Case Histories: Situations & Solutions Nov 2008 © Wayne Wilson & Company. 15
  16. 16. Case #1 – Janitorial Svcs ___________________________________________________ Situation Solution • Closely held • Strategic sale to large • Profitable national operator • Strong local franchise • Premium price • Owner wanted to • 100% seller notes retire – Secured – Above market rate – Limit reinvestment risk Nov 2008 © Wayne Wilson & Company. 16
  17. 17. Case #2 – Software services ___________________________________________________ Situation Solution • Closely held • Strategic sale to public • Growing rapidly company buyer • Little infrastructure • Cash + earnout • Needed help • Continued w/ business – Div President – Options – Career path Nov 2008 © Wayne Wilson & Company. 17
  18. 18. Case #3 – Radio Station Gp ___________________________________________________ Situation Solution • Closely held • Private equity leveraged recap • Had grown rapidly via acquisitions • Back-end equity stake; but No cash • Struggling with heavy • Continued to run the debt load during a business • Downturn in • Stake worth millions advertising after advertising rebound Nov 2008 © Wayne Wilson & Company. 18
  19. 19. Case #4 – Cutting Tools ___________________________________________________ Situation Solution • Closely held • Private recap – sale to a • Very profitable large conglomerate • Owner healthy but • Sold 80% for Cash for getting older estate liquidity & gifts • Concerned about • Retained 20% of equity estate planning • Continued to run the business Nov 2008 © Wayne Wilson & Company. 19
  20. 20. Case #5 – Construction Co. ___________________________________________________ Situation Solution • One owner – wanted • Management buyout to retire • Bank loan, personally • Very profitable guaranteed by managers • Two key operating for initial payout managers • Seller notes for balance • Owner flexible on over several years pricing Nov 2008 © Wayne Wilson & Company. 20
  21. 21. Case #6 – IT Reseller ___________________________________________________ Situation Solution • Closely held • Initial public offering • Growing rapidly • No secondary shares • Needed growth capital • Large tax dividend • Owners wanted to • Take out > $30 m of maintain control $60 m proceeds Nov 2008 © Wayne Wilson & Company. 21
  22. 22. ___________________________________________________ Where Do YOU Want to Go? Nov 2008 © Wayne Wilson & Company. 22
  23. 23. About Wayne Wilson ___________________________________________________ Wayne Wilson is the principal of Wayne Wilson & Company (www.waynewilson.com), a business advisory services firm providing executive coaching and advisory services on growth-related issues to owner/CEOs of middle-market companies. He has advised companies on: developing growth strategies; improving operational profitability; financing business operations; establishing corporate governance and management processes; designing management incentive compensation programs; managing mergers & acquisitions; and monetizing founder equity. Wayne can be reached at 603.763.3435 or wayne@waynewilson.com Nov 2008 © Wayne Wilson & Company. 23

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