Tag: Succession Planning

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You Are Destroying Business Value, Just Pay the %^$*^R and Move On!

Business owners working on exit planning and maximizing the value of their company for sale often take a wrong turn. Litigation is a nightmare. When we work with owners to sell their companies and advise on the value-building process, we find they are sometimes destroying business value without realizing the extent of it.

We are human beings – we get into disputes. This is America – people sue people. If you have been through business litigation of any sort, you know it is not pretty. In the end, it’s rarely worth it. You may be in the right, there may be real damages or loss of money, and darn it, they should pay!

Certainly, there are situations in which you cannot avoid the dispute dragging on. It may be a substantial amount of damages or it may be a more complex situation tied to other potential liability. Often, however, the relentless, unending fighting – especially going all the way to court – can reduce the value of your company. If each year over a few years you are paying $100,000 in legal fees and your net income takes a hit of $100,000, the reduction in business value can be in the hundreds of thousands of dollars.

    • Revenue Decline: There is no question that you will be distracted by the process. Even with your attorneys handling much of the work, it will always be on your mind. Stress grows and you will have a less-than-100% focus on growing your business, exit planning, and building value for a sale. Revenue will suffer.
    • Bad Decisions: You will – consciously or subconsciously – adjust the decisions you make away from your best course of action because of the ongoing dispute and its implications.
    • Attorney Fees: They add up very quickly – quite possibly ending in more money than it would have taken to just pay the *$*&* and get it behind you to focus on value growth.
    • Brand Damage: The longer the fight continues, the more likely this will get out to hurt your brand and image, even if you are right!

 

36 to 53 percent of small businesses are sued in a given year.

~4 Small Business Statistics About Lawsuits – SmallBizDaily

So just forget it?? Well, sometimes, yes, as much as it pains you. Work with your attorney to make a fair offer, even go a little higher to get it settled! The investment can be worth it!

There are great attorneys who know that doing right by their client is to quickly come to an agreement. Make sure your attorney is not encouraging you to fight without considering all options, the financial implications, and the effect on business value. Consider the options, despite your frustration. You may be on the right side of the dispute but don’t reduce the value of your business any further.

Don’t let one of these issues delay or derail your exit planning, value-building, and the sale of your company. Resolving these issues quickly will help you maximize value and move through the business transaction process more smoothly and quickly.

Call if we can help you think through your specific situation. Always happy to have a conversation to provide some guidance on the business sale process, business value, exit planning or building value for sale.  

 

David Shavzin, CMC, Exit Strategist

David Shavzin

Transactions, Value Growth, Exit Planning, Succession Planning

Founder and President, The Value Track, Atlanta, Georgia
Co-Founder and President, Exit Planning Exchange Atlanta

 

 

 

 

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.

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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