Tag: Exit Strategy

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Plant a Pine Tree!

Do you know the best time to plant a pine tree?

TWENTY YEARS AGO!!

Do you know the best time to plan your exit strategy??

The first day you stick the key into the front door of your new office!

Franklin Covey said, “Start with the end in view!”

I know in the excitement of launching a new venture and all the chaos that ultimately ensues, an exit strategy is the LAST thing on an aspiring business tycoon wants to consider.  The problem is that once it is pushed to the back burner, it tends to stay there for the next 30-40 years!

So let’s compromise!  If you are 55 years old and own a business, it is time to start giving serious consideration regarding what your ultimate destination will be.  An “Exit Strategy” is about selling the business off and a “Succession Plan” is about passing it down to the next generation, but both demand serious consideration well before you are ready to step away.

Two realities must align at the same time to maximize the value of a business: The owner must be mentally and emotionally prepared to walk away from a business they birthed and nurtured for the last 30-40 years AND the business must be structured to operate without the daily oversight of the owner and generating the highest level of profitability possible. Invariably, the business owners get to the finish line before the business is ready to command its highest multiple!

Now a good M&A guy can recast your financials to take out the country club membership and the spouse’s Cadillac, but if profits have been leaking out of the business, there just isn’t enough lipstick to make that pig win the blue ribbon!

The reason a 10-year runway is advised is to be able to make any necessary corrections in the business and run at that higher level for at least 3 to 5 years prior to going to market to demonstrate sustainable profitability.

As Dr. Ortego used to say, “The VALUE of a thing is the PRICE it will bring!”

Plan NOW to MAXimize Your Exit!!

 

Ralph Watson

Ralph Watson has a varied and extensive career spanning 45 years of increasingly responsible positions in both sales and operations in a very diverse mix of industry specialties, including food processing, textile and apparel, financial services, and professional management consulting.

Ralph served as a Senior Executive Analyst with a number of international consulting companies focused on the family-owned, privately held market where he distinguished himself as one of the top analysts in a highly competitive field.  In early 2014, he personally coached 10 businesses in Europe.

Ralph C. Watson, Jr.   404-520-1030

Thank you for visiting our blog.

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During & Post-Crisis: Preserving, Rebuilding & Growing Business Value

You need to address the urgent needs of keeping your family safe and healthy. You need to address the critical issues around employees, payroll, managing your cash and other realities of the current crisis. Period! Absolutely! If you haven’t spoken to your bank about the financial relief bills that congress is about to pass, call them now!

 

You also need to get back to business to the greatest extent possible as you address these – hopefully – short-term issues, even if you are doing it from your home kitchen table in your pajamas. During the last recession, I saw too many business owners slow down when they should have been redoubling their efforts.

 

You need to get back to basics and plan out how your business may change (opportunities!) and how you are going to ramp up as quickly as possible. You need to get back on The Value Track and back to exit planning – creating your future: your exit / succession / transaction. Make sure that you are integrating your short-term crisis management decisions into your planning. They will impact your business and its value just like any other decision.

 

How can you keep to your timeline for the sale of your business or get back to family business succession planning for the transfer/sale to your children or other family members? It may be delayed but don’t assume it will and don’t slow down working toward it.

 

What can you learn from what other companies are doing? What is likely to change as we come through this period that you can adapt your product or services to address. (Hand sanitizer in happy meals? McD’s, I want royalties!) I am very serious about this. My clients have been hit hard like everyone else, in a variety of ways. They are all getting creative in the short-term and I know that these decisions and detours are going to make them stronger and more valuable companies.

 

You need to have a clear, but flexible plan that considers the “what-ifs”. Whether here in the Spring of 2020 or in every year since you started your business. You won’t always know what those “what-ifs” are, but they WILL occur. Hurricanes, recessions, competitors, regulations, your own illnesses, tariffs, hacking, lawsuits…

 

Here are 4 brief blogs I have written over the last 10 years on the topic of business risk. These business management and leadership issues did not start today. Take a few quick minutes: Thoughts to Consider on Risks to Your Business

 

In the meantime, I am reiterating my offer of a one-hour conversation with you, your clients or other business owners who could use a sounding board at this time – whether for input on urgent problems, thinking through strategy in order to come out of the crisis or to focus on building/rebuilding value if working toward a sale.

 

This year of challenges marks my 20th year in practice as a consultant, coach and exit strategist; helping clients grow, solve problems, build value and work on exit strategy. I would be happy to explore how my 20 years of experiences with other clients – and how they are addressing this situation – might provide insights and help your business survive & thrive!

Stay Healthy & Safe!

David Shavzin

 

David Shavzin, CMC
Exit Strategist – Value Growth, Exit Planning, Succession Planning

Founder and President, The Value Track, Atlanta, Georgia

Partner, ITB Partners

 

 

Building Transferable Value for Sale
770-329-5224 david@GetOnTheValueTrack.com
Our BLOG // LinkedIn // www.GetOnTheValueTrack.com

 

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Family Business Transfer Conversations – Talking with Your Adult Children About Succession Planning

Family Business Succession 

 

David Shavzin

Are your children ready to take over your business? The answer I usually get is something like “No, she has only been in the business for 10 years, she’s not ready to run a business.” Or, “He will get it eventually, but there is no rush.” Exit planning and succession planning are critical to a smooth sale and transition, but they are too often ignored until it’s too late, especially when it comes to family business situations. Are you burying your head in the sand because you are uncomfortable planning to leave the business?


You don’t have to leave tomorrow. At the same time, starting early will help you think through a variety of options to find a structure that best fits your needs. An early start will also provide enough time to talk through key issues with family, inside and outside of the business. The issues can be thorny ones when dealing with the family business, but time can bring everyone together.


Don’t leave a mess for your spouse, children, and employees. We will ALL exit our business at some point, one way or another. The process of selling is very complicated, and it will take much longer than most owners expect. Family business transfers are especially complex.


Again, you don’t have to rush out the door just because succession planning begins. But your family and employees will be more engaged knowing that you are laying out a game plan. If they are not yet ready, start now and include a plan for them to get ready. You may still think of them like this, but they really may be more ready than you think.

 

It takes a huge toll on morale when your children lack specifics and any semblance of a timeline. We routinely hear from adult children of business owners who are beyond frustrated at the lack of a real plan as to how they will eventually start taking steps to succeed Mom and Dad. They don’t need it to happen next week, but they need to know how and when. And, yes, what they need to do to show you that they are ready.


They may never be ready. However, getting an early start on talking about these issues will help you determine whether that is the case or not. You may find that they don’t want the family business, even if they would be capable. Either way, you need to know that as early as possible.


Get your family engaged in these complex issues. The right conversations will lead to the engagement that carries on your business legacy for years to come. Another significant benefit to family business succession conversations is that with a plan in mind, business value growth becomes a lot easier.


Let us know if a conversation about your specific succession planning situation would help you move forward.

______________________________________________________________________________________________

David Shavzin, CMC
Exit Strategist – Value Growth, Exit Planning, Succession Planning
Founder and President, The Value Track, Atlanta, Georgia

Building Transferable Value for Sale

770-329-5224 david@GetOnTheValueTrack.com
Our BLOG // LinkedIn // www.GetOnTheValueTrack.com

 

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David Shavzin, CMC, Exit Strategist, interviewed on RadioX North Fulton.

David Shavzin Interviewed by N. Fulton RadioX

David Shavzin created The Value Track to help business owners build value and create a path toward a successful exit. Too often, they have not built the value they need and are unprepared when the time comes to put their transition into action. In this RadioX interview, “Maximizing Exit Strategy, Understanding Value”, interviewed by John Ray on Business RadioX®:  Listen to the Interview

David discusses critical issues that business owners need to understand in order to maximize the sale of their business. Exit planning is a process – not something to decide one day, and try to implement the next.

David helps business owners think through their long-term goals and plans, educates them on business value and brings the right – collaborative – advisory team around the table. He then assists in the implementation of value-growth initiatives, guiding them to a successful transition (sale, family transfer, etc.). His 7-step process improves their quality of life and allows them to exit on their own terms.

A frequent speaker on these topics, David is a CMC, former IMC Georgia chapter president and President and Co-Founder of Exit Planning Exchange Atlanta, formed to bring advisors together in a collaborative effort to serve their clients.

His early career was in banking and finance, then 12 years with life sciences company Sanofi/Aventis. He spent 4 years in corporate finance and Mergers & Acquisitions. Then, 8 years of leading teams responsible for Quality, Finance, Supply Chain, Customer Service and IT functions within a $175M subsidiary.

For More Information, Contact David Shavzin at:

(770) 329-224

david@getonthevaluetrack.com   

 

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David Shavzin, CMC to Speak at IMC USA’s National Conference, ConsultCon 2019

David Shavzin, CMC to Speak at IMC USA’s National Conference, ConsultCon 2019

 

David Shavzin

David, exit planning advisor, is Founder of The Value Track. He will speak to conference attendees on “Riding the Wealth Transfer Wave, Helping Clients Maximize Their Exit.”

Four million business will be sold in the next 5-10 years, resulting in a multibillion-dollar transfer of value. This is a significant opportunity for consultants because most business owners are not preparing an exit strategy. The right advisory team, working together, will help clients maximize the eventual sale of their business.

David created The Value Track to help business owners build value and create a path toward a successful exit. Too often, they have not built the value they need and are unprepared when the time comes to put their transition into action. David helps his clients improve their quality of life, build value in their company and exit on their own terms.

 

ConsultCon 2019, IMC USA’s National Conference (Dallas Oct. 4 – 6). Speakers also include Dave Copps, Melinda Marcus, CSP, and Alan Weiss. Starting out or a seasoned consultant, please join us to connect with other consultants, learn & form potential alliances. Info & Register: https://www.imcusa.org/page/ConsultCon2019  

 

David Shavzin, CMC

david@GetOnTheValueTrack.com

https://getonthevaluetrack.com/

 

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My Business is Worth HOW MUCH?!?!

The Problem

We recently spent 2 hours explaining to two business partners what their business was worth and why. They were disappointed but excited to understand the value and how they would manage the business going forward.

 

Buying or selling a business is not easy, even for professionals who spend all their time evaluating deals. Granted, professionals have a far better understanding of the market, the supply and demand for businesses.  If they specialize in a specific industry, as many do, they have an even better perspective on the market and the competitive dynamics for that sector. They understand the challenges of that line of business, including the anticipated cost of innovation required to remain competitive.

 

Even so, the professional must deal with challenges unique to each individual deal. Depending on the strategies employed by competing buyers, whether they’re strategic or financial buyers, the professional may be at a competitive disadvantage for the same acquisition target.  In other words, buyers seldom have the same cost of capital.  For any given transaction this dynamic will work in the favor of one or the other buyer.  There are no guarantees as to an outcome.

 

For someone looking to sell their business, the challenge becomes monumentally greater.  It is likely that these owners have been completely focused on their day-to-day operations, probably paying little attention to the details of merger and acquisition activity in their industry.  As a result, they are not savvy sellers. They must learn as much as they can as quickly as possible to realize the most value from the sale of their company.

 

When we present a valuation to our clients, they are usually horrified. The value is most often nowhere near their expectations or needs. The disbelief and devastation are apparent. Why is this?  Business owners do not have a full understanding of what drives business value.

 

Ultimately, the value of a company depends on internal and external factors to the enterprise. Clearly, internal factors are more straightforward. Most people understand that sustained revenue generation is a key driving force, along with the margins generated on that revenue, and non-cash expenses, i.e. depreciation and amortization.

 

External factors in play include the overall state of the economy and the attractiveness of other businesses for sale in the same industry segment.  This will provide an indication as to the interest level for the business and other potential sellers.  Whereas buyers may be active in a depressed economy when prices may be lower, sellers are less motivated.  On the other hand, the least competitive companies may be forced to sell during a recession.

Research says that 4 million businesses will be sold over the next 5 – 10 years. If that’s even close, you know that most will be selling for well under what their value could have been…IF THEY SELL AT ALL.

 

When is the Best Time to Get on The Value Track?

The ideal time to begin building value is the moment you start your business. But most of us are scrambling to get going – and then get so busy with growth – that we delay focusing on building value and exit planning. We are caught up in putting out fires, it remains a lifestyle business, value suffers.

 

The Value Track – 7 Steps in the Process

The Value Track is a proven, 7-step process of improving profitability and building the transferable value – the real value – of your business. Embracing the Value Track approach will help you exit ownership on your own terms, create your best possible future and improve your quality of life.

Whatever stage you are at in your business’ lifecycle, this process gets you beyond all of that and onto a serious Value-Building track for your company. Click here for 3 client stories at three stages.

 

  1. Get Everyone on the Same Page
  2. Understand Current Business Value
  3. Build Your Advisory Team
  4. Exit-Readiness Assessment
  5. Build Value
  6. Determine Exit Structure
  7. Execute the Transaction

 

Are You on The Value Track? Learn More About the 7 Steps here: The Value Track

 

David Shavzin

David Shavzin, CMC
Founder & President, The Value Track

770-329-5224
david@GetOnTheValueTrack.com

Succession Planning / Exit Planning, Building Transferable Value for Sale
Our BLOG  // LinkedIn // www.GetOnTheValueTrack.com

Tags: exit plan, Exit Planning, exit strategy, transferable value, value, Value track

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber, Managing Partner

ITB PARTNERS

Jim.Weber@itbpartners.com

Author of: Fighting Alligators, Job Search Strategy For The New Normal

 

 

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Exit and Succession Planning is a Team Sport

We have advisors and coaches in all facets of life. But in this most important area for our future, for our family and for our retirement, most business owners are pretty much just “winging it”. Oh, they may have an accountant but not much more of a team to focus on exit planning in all its complexities. An advisory team is critical for successful succession planning.

Business owners start their companies to create their future. But they often lose sight of the key to making that future happen – building value. They get caught up in the day-to-day and don’t get to implementing the sustainable, positive change that allows them to transition on their own terms.

Consider: “…78 percent of small-business-owner clients plan to sell their businesses to fund their retirement. The proceeds are needed to fund 60 percent to 100 percent of their retirement needs. Yet, less than 30 percent of clients actually have a written succession plan…”
http://www.cnbc.com/2015/04/13/ew-small-biz-have-an-exit-plan.html   [I would suggest that 30% is generous, and even if accurate, that those plans are not very effective, for growth or for exit planning.]

When I speak on exit planning/succession planning/transition planning, I outline a proven 7-step process. Forming your advisory team is one of those steps.

Build a Team of Advisors.

Nobody knows everything. Many of my clients are in creative industries, designing, creating, building. You don’t want me in that role. But I have worked with many organizations and have a different experience and skill set than my clients. I bring ideas and experience from many industries and many client engagements. The other critical exit planning team members bring their own expertise to the table. These should include:

  • Exit Planning Consultant / Coach
  • CPA
  • Financial Advisor
  • Business value expert
  • Business Attorney
  • Insurance Expert
  • Estate Planning Attorney
  • Banker
  • Business Transaction Expert

When I work with a client, we build this team. The players may already be in place. Or, we may bring in advisors where there is a gap. Either way, we need this core team working with the owner. A business is complex.   A marketing action impacts finance, HR, and more. Big decisions need to take into account the effect on the whole organization and should support clear goals focused on building value.

The client receives much better advice and guidance with this approach.

This does not mean that you are going to start hiring all of these people and employing them full-time as you work toward your transition…especially if you have a few years to go. But, you should use them strategically as you build your business/succession plan. For major decisions on growth, expenditures, hiring, exit-readiness, business value, deal structure…engage their expertise!

The Bottom Line

 Find advisors who understand what you are all about, your growth and exit planning objectives. More importantly, find advisors with whom you feel comfortable. Make sure that they can work together and collaborate on your behalf.

 

********************************************************************

David Shavzin, CMC
770-329-5224
david@GetOnTheValueTrack.com

The Value Track
Succession Planning / Exit Planning, Building Transferable Value for Sale

Thank you for visiting our blog.

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber, Managing Partner

ITB PARTNERS

Jim.Weber@itbpartners.com

Author of: Fighting Alligators, Job Search Strategy For The New Normal

 

 

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In Your 50’s, 60’s or 70’s Without an Exit Plan?

 

Shavzin & Associates
David Shavzin

By David Shavzin

I hear it more and more coming from Baby Boomers. This question is often posed casually: “So what do you think, should I start my exit plan 2 years ahead, maybe 3 years ahead?”

 

They often ask knowing the answer. They are trying to make themselves feel better because they haven’t created an exit plan and they know they should have started it long ago. If I respond that waiting until 24 months ahead of sale is ok, they can let themselves off the hook for not having an exit plan in place.

 

I hear from business owners every day.

  • Some say they are tired and would like to get out. They do not want to put in much more time or invest in building the value of the company. Yet, they are not satisfied with what it is worth today.
  • Some in family businesses have put off building a succession plan for a generation to generation transfer. They may feel they have time, or they may feel that their children (children often in their 30’s and 40’s) are “not ready yet”. They may fear losing an income stream as they transition out of the business.
  • Some are simply working the business, taking no time to develop an exit plan that could dramatically increase the value of the business when it comes time to sell.

If any of these ring true for you, there are many potential solutions to address your concerns and situation. Take the first step and have a conversation with all in involved. A good advisory team can help guide those exit plan discussions and provide an objective, experienced perspective. There are so many business exit options.

 

If you do have just a few years, there are a number of things you can do to optimize that exit and get everyone on the same page. But “2 – 3 years” is NOW, especially if you are a business owner in your 50’s, 60’s, 70’s or older. You have heard when talking about stocks that you can’t time the market. It’s the same thing for your business. And, remember, the sale process itself can take 6 or 9 months to a year.

 

There will be a downturn in the market. Getting caught in that next downturn will likely reduce the value of your business. Perhaps more importantly, it could keep you captive in your business for another few years as you rebuild.

 

Questions to ask yourself:

  • Do you know the value of your business? Don’t rely on a value that is some industry multiple or that sounds reasonable or what you’d like. Get professional assistance. This is your life, livelihood, and retirement.
  • When do you want to be completely or mostly out of the business?
  • Can you wait out the next downturn? If you are thinking of a 2- to 3-year timeframe, what if the economy slows down? Can you wait another few years to rebuild the value of your business? Or are you willing/able to walk away with less money?
  • Do you have a solid plan for what you will do after your exit?

By the Way, It’s NOT all about YOU!

 

Without an exit plan, you are not just risking your own retirement or next phase of life. You are putting in jeopardy your spouse, children, their families, your employees, their families and more.

 

The message is simple: work with your advisors now to get a good understanding of your situation. The more informed you are, the better positioned you will be in creating an exit plan that works for you, maximizes value and minimizes risk. You will leave the legacy that you want, not what others want. You will create your future!

 

Get Started on Your Exit Plan

If you haven’t begun to plan, get on it! Get a business valuation done, build your advisory team, start on building business value!

 

Need to Get an Idea of Where You Stand?

Thank you for visiting our blog.

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is important to me so; please leave a comment.

Jim Weber, Managing Partner

ITB PARTNERS

Jim.Weber@itbpartners.com

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Your Exit Plan Needs to be Right for YOU! By David Shavzin; Shavzin & Associates

In a previous blog post on Exit Planning and Succession Planning Options, I discussed the many ways to exit your business. When exit planning, we tend to think of simply selling the business one day and receiving a check for the full amount. The reality is quite different. There are so many possibilities, many that may be much more in line with your transition planning needs. As a business owner selling a business, you need to consider the options.

 

Exit Planning Options – Real, Current Client Examples

 

It occurred to me recently that my current clients illustrate this in a very real way. It is one thing to walk through potential, theoretical ways to exit – another to be hands-on guiding clients through so many different approaches that best fit THEIR SPECIFIC needs as they build transferable value over time.

 

At this moment, I am working with clients with a wide variety of exit strategies that include:

 

  • A transition from one Generation to the Next: planning includes business value growth, skills development and “upgrading” marketing efforts.
  • An outright Sale to a 3rd Party: work is focused on building revenue, profitability and transferable value to maximize the sale price. Classic exit planning – build value and put it on the market.
  • A Merger of two companies: one of the owners buying out the other. Key to success is a focus on building value over time to ensure the company continues to be attractive to the younger partner, who will eventually buy out the senior partner.
  • Equity Investor – Partial sale, possibly a complete exit over time: an early stage company with high growth, considering a first round of private equity investment. Eventually, there may be a second round and/or an outright sale.
  • Transition to Children: a family-owned company thinking 20 years ahead to the succession planning that will prepare their currently young children to take over the business. All of the foundational work and value growth will provide for alternative exit strategies should the children not end up taking over.
  • Keep Options Open: Plan for a third-party sale, with a potential next generation stepping in, to be determined. Working on building transferable value and cleaning up the infrastructure for either eventuality.

 

Get Started on Your Exit Plan

 

The past blog post I mentioned on exit strategy options may sound theoretical. I hope these real client examples get you thinking about YOUR succession planning options. Consider the alternatives that may be more appropriate, more profitable and more in tune with how you would like to create YOUR future.

 

If you haven’t begun to plan, get on it! Get a business valuation done, build your advisory team, start on building business value!

 

Need help with an Exit Readiness Assessment? Give me a call!

 

***********************************************************************

David Shavzin, CMC

Shavzin and Associates, Inc.

Valuation, Succession Planning / Exit Planning, Building Value for Sale

Atlanta, Georgia

770-329-5224

 

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dshavzin@shavzinassociates.com

www.ShavzinAssociates.com