Transitions Digest

The Exit Planning Review™ Bi-Monthly Newsletter

Why Owners Choose Not to Sell

If you simply are not emotionally ready to sell, if there is still fire in your belly — enough fire to fuel your continued investment in the company — or if you ultimately want to leave the business to family members or employees, then you may not be in a position to sell your business — yet. If you and the business are ready to sell, but you still hesitate, let’s look at typical reasons for that hesitation and what you may be able to do about it.

The premise of this article is that owners typically don’t sell when they should because they procrastinate, or they fear the unknown and, perhaps more specifically, they fear losing the known.

Procrastination on the part of an owner is not uncommon and can arise for one of several reasons. First, some owners just don’t know where or how to start planning an exit. If you are one of those owners, then reading the remainder of this article is a good start. The next step is to contact our offices to begin the process of creating an Exit Plan that allows you to cash out of your business and leave in style when you are ready to do so.

Second, some owners think that they can sell later, but as we have been discussing, when most Boomers reach retirement age, the glut of companies in the marketplace may drive prices down. Further, the M&A cycle can have a huge affect on the sale price of a company.

In the third group of procrastinating owners are those who believe that because they have “good” businesses, the process will take care of itself. When they think about selling, they simply assume that there isn’t much for them to do. They believe that when the time is right, the right buyer will appear and pay them a great price for their company.

It does happen, albeit quite rarely, that the right buyer appears and pays a great price for a great company. However, it can be much better to prepare for the biggest financial transaction of your life, instead of leaving the success of your business exit to the luck of the draw.

In our experience, the owners who suffer from the fear of the unknown usually hold one (or more) of the following opinions:

• I don’t think the business is worth enough to satisfy my financial needs and objectives.
• If the employees discover I’m trying to sell, they will all quit.
• Because I’m indispensable to the company, I’ll be required to work years for a new owner and I don’t like working for anyone!
• The sale process will take too long and cost too much.

On the other hand, the fear of losing the known is usually based on the following:

• The business has been my life — or at least it has given my life a great deal of meaning and focus; without it I may feel lost.
• The government will take too much in taxes — it’s easier, less risky and more lucrative to stay, enjoy the cash flow and then leave getting paid over time.
• What will I do after I sell and leave the business? I don’t know what my life will look like if I leave.

If one of these concerns resonates with you, then the time may be now to call our office to squarely assess these concerns. We can help you identify which concerns may be truly “real” and which ones may be easily resolved. We can help guide you through the process of reviewing all of the factors associated with exiting your business, which may include the creation of a comprehensive Exit Plan that can help remove the common roadblocks, while addressing all of your personal and business objectives.

Subsequent issues of The Exit Planning Digest discuss all aspects of Exit Planning. The provider of this Newsletter (Holly Magister, CPA, CFP®) offers you unbiased information about what you may need to know. Subscribe to our free Exit Planning educational newsletter to learn more about how to grow and/or plan for your business exit.

Posted on August 27th, 2008 under Exit Planning, Exit Planning Digest. Tags: Enterprise Transitions, Exit Panning Review, Exit Planning, retire, retirement, should I sell my business now?, Strategic Exit Plan, Strategic Exit Planning. Comments: None

Issue: #101 June, 2008 Creating clarity for Entrepreneurs and their families Dear Client,          Enterprise Transitions would like to welcome you to our monthly newsletter! As you are aware, our business specializes in offering middle market expertise to business owners regarding Emerging Business, Exit Planning, Buy-side Representation, and Sale Side Representation. Together, we can create growth in your business, consider an aquisition, facilitate your exit, and ultimately complete the transaction for its sale! For our first issue, the following Executive Summary highlights a company seeking to sell their business.   Sincerely, Holly A. Magister Enterprise Transitions LLP                                                              Executive Summary                SIC #5063 Electrical Apparatus and Equipment   Gross Sales - $8.9 Million                     Recast EBITDA - $347,450   Business Activity: Nearing its 25th year in business, this eastern United States company distributes electrical products to its regional customers.   Customers and Markets: The company provides its products to regional real estate development projects and to the general electrical trade. During the 2006-2007 year, sales increased by 18.31%. Due to the continued upswing in such developments located just a few miles from the company’s facility, a continued increase in sales is forecasted.     Additional Opportunities: The company is partnered in a Joint Venture that allows existing customers to bid and fulfill government and institutional projects by supplying materials from a minority or woman-owned business.   Competitive Factors: The company is recognized as a leading distributor of electrical products in its geographic area.   Employees: A devoted roster of 18 full-time employees consitute the experience, responsibility, and administrative aptitude needed to run the business successfully. The owners are also involved in the day-to-day operations of the business.   Assets: Throughout the region, the company has a well established and reliable name with substantial goodwill. Such healthy relationships with customers and vendors and a long-standing respectable reputation in the business community have contributed to the future value of the company.   Facilities: The business operates from two leased facilities owned by shareholders of the company. Organization: S Corporation. There is no known litigation against the company. The transaction includes all tangible and intangible assets of the company.   Other: Interested parties will be asked to sign confidentiality agreements prior to receiving additional information.                   Again, we would like to thank you for your time and consideration. If you have any questions, please do not hesitate to contact us. All contact information is on the right side of your newsletter. It’s a great day at our office; we hope your day is great as well!                   Quick Links More on our Services Core Resources Strategic Resources   Interested in our Highlight Company?  Take Action! To inquire more about our featured business, call our office at 724-733-2548. We can provide you with additional information and begin leading you in the right direction.                         Full Contact Information:  Holly A. Magister, CPA, CFP 4120 William Penn Hwy Murrysville, PA 15668   holly@EnterpriseTransitions.com    724-733-2548

 If you would like to subscribe to the Bi-Monthly Exit Planning Review, please click on this link: Exit Planning Review Newsletter Subscription

Posted on August 25th, 2008 under Exit Planning Digest. Tags: business broker, business brokers, business exit planning, business for sale, business mergers and acquisitions, businesses for sale, Cleveland, emerging, emerging markets, emerging technologies, emerging technology, Enterprise Transitions, Entrepreneur, Entrepreneurs, Entreprenuer, Entreprenuers, exit plan, Exit Planning, exit plans, exit strategies, exit strategy, how to buy a business, how to sell a business, llp, M&A, mergers and acquisitions, new emerging technologies, OH, PA, Pittsburgh, Quarterly Newsletter, retire, retirement, sell a business, sell businesses, sell my business, sell your business, small business for sale, Strategic Exit Plan, Strategic Exit Planning, transaction, transactions, transition, transitions. Comments: None

We offer middle market expertise to the owners of businesses with gross revenues between $5 and $50 million (service businesses with gross revenues of more than $2 million). We focus our resources on the emerging (growth) phase, acquisitions, exit planning and/or the sale of your business. Next to the growth phase, we believe the acquisition or sale of a closely held entity to be the largest, most significant event in a business owner’s financial life. The consequences to an owner, a spouse, children, and grandchildren are enormous. That’s why we work collaboratively with a business owner’s existing professional advisors or, if needed, offer immediate access to our alliance of several dozen professional advisors. Together we can successfully help grow your business, consider the consequences of an acquisition, facilitate your exit, and/or ultimately complete a transaction for its sale.

Please visit our website at www.enterprisetransitions.com .

Posted on August 25th, 2008 under Uncategorized. Tags: business broker, business brokers, business exit planning, business for sale, business mergers and acquisitions, businesses for sale, Cleveland, emerging, emerging markets, emerging technologies, emerging technology, Enterprise Transitions, Entrepreneur, Entrepreneurs, Entreprenuer, Entreprenuers, exit plan, Exit Planning, exit plans, exit strategies, exit strategy, how to buy a business, how to sell a business, llp, M&A, mergers and acquisitions, new emerging technologies, OH, PA, Pittsburgh, retire, retirement, sell a business, sell businesses, sell my business, sell your business, small business for sale, Strategic Exit Plan, Strategic Exit Planning, transaction, transactions, transition, transitions. Comments: None

By Donna Billings, PCC and Jane Patterson, CPPC

You’ve decided it’s time to sell the business. You have an offer. Your advisors are telling you it’s a fair price.  But something is holding you back. 

It’s not unusual for a business owner to come to the brink of sale and then pull back, believing that a better offer is just around the corner.  You ask yourself, “What’s the hurry?” But we know this can be dangerous thinking because for each company there is a time and season to sell when the maximum market value of the company has been reached.  Prospective buyers lose interest because they’re not convinced that a deal is possible.  And, morale and productivity are affected when employees are placed in and out of uncertainty.

At Enterprise Transitions, we recognize that the sale of your business is a significant decision with consequences for yourself and your family, employees and customers. Our team of financial and legal experts works with you to assess when the time is right to sell and evaluates and negotiates offers to ensure the best price.  We also recognize that there are other, non financial, aspects that you are considering, such as:

• What are your goals for the future, personally and professionally? Is it time to retire, and if so, what might retirement look like for you?
• How will you transition from your role as business owner to what’s next? 
• What about your employees?  How can you help them transition to new ownership?

These are legitimate and important questions for all business owners. So we offer a team of professionally trained and experienced executive coaches to help our clients explore these and many other related issues.

What is coaching? Coaching is a partnership designed to help you achieve professional and personal goals which, in turn, enhances your effectiveness and quality of life. Coaches are trained to listen, to observe and to provide support.  A coach may share experience, expertise and information. Primarily a coach asks powerful questions and guides their clients to confront situations, solve problems and make decisions.  Although our coaches have a great empathy for and understanding of human behavior, coaching is not therapy.

How can you benefit from coaching? The Wall Street Journal reported that more than 60 percent of executives at Fortune 500 companies now work or have worked with an executive coach. Studies show that more than 93% of executives who have received coaching would recommend it to others, realizing an average ROI of 5.7 times. The coaches affiliated with Enterprise Transitions are highly trained professionals with extensive leadership and business experience in strategic planning, career transition, organization development and more. Importantly, each of our coaches is an entrepreneur themselves, running a successful coaching business.

Your company has been your life for many years.  You and your family have sacrificed. You’ve built a good business and stuck with it through thick and thin. You’ve built a reputation by making tough decisions.  You’re proud. And you should be. If something is holding you back from the decision to sell your business, price might not be the only issue. Contact us to arrange for a confidential session with an executive coach to explore more fully the next step.

(This is the first of a three part series which will explore the benefits of executive coaching for business owners during the emerging, acquisition, exit planning and/or business sale stages.)

Posted on August 25th, 2008 under Uncategorized. Tags: acquisition, business sale stages, coaching, emerging, Exit Planning, facing retirement, family business, how to retire, planning for retirement, process of selling a business, process of selling a family business, retire, retirement, retiring, selling a business, selling a family business, selling business, thinking of selling business, when to sell a business. Comments: 1

By Donna Billings, PCC and Jane Patterson, CPPC 

You did it! After endless hours negotiating, you finally got “The Number” - the amount of money you consider a fair price for your business.  When the sale closes you’ll have enough for the kind of retirement life you’ve been waiting for:  Freedom. Security. Quality of life.

But something is holding you back.  Money isn’t the issue.  And you know the company will be in capable hands. Even your family is behind you 100%. You hate to admit it, but what’s most on your mind is, “What will I do if I retire?”

You’re not alone.  We’ve heard that question from many clients, especially an entrepreneur who has invested his/her entire life running his/her own company.  On one hand, the good news is that people are retiring earlier than ever (age 58 today, which is down from age 65 in 1990) and living longer (women age 84 and men 81). The bad news is that a recent study revealed that 81% of retirees feel they should have planned better for what they would do in retirement.

One client characterized her first year of retirement as “a roller coaster ride of ups and downs, great times and wasted time.” For many, this is the first opportunity in a long time to make meaningful choices about the future. But choosing can be difficult because there are tough questions to face: “What really matters to me? Who is important to me? What do I really want to do with the time that’s left in my life?”

To plan or not to plan, that seems to be the question.  Yet, it’s somewhat of a Catch 22, isn’t it? You shouldn’t retire until you know what you want to do but you don’t know what you want to do until you retire! For one entrepreneur, retirement without knowing exactly where, what and how he/she will spend his/her time is out of the question. For another, he/she can’t wait to simply live in the moment.

What do we think about retirement planning?  At Enterprise Transitions, we know that each client has a unique personality and circumstances. We simply don’t believe there is just one right way to retire. Our executive coaches work with a client (and often family members) to design a retirement lifestyle that meets the client’s particular needs and goals.

We know that the only mistake you can make in retirement is to try to do it like someone else. You’ve earned the chance to live life your way and by working with an experienced executive coach, you’ll explore how you make the most of this next stage of life. You’ve earned it!

(This is the second of a three part series exploring the personal impact on business owners during the emerging, acquisition, exit planning and/or business sale stages.  Executive coaches Donna Billings and Jane Patterson, are available for a private consultation to discuss your retirement transition.)

Posted on August 25th, 2008 under Uncategorized. Tags: acquisition, business sale stages, coaching, emerging, Exit Planning, facing retirement, family business, how to retire, planning for retirement, process of selling a business, process of selling a family business, retire, retirement, retiring, selling a business, selling a family business, selling business, thinking of selling business, when to sell a business. Comments: None