Moving On

Chapter 1: Let’s Have a Conversation  1 Shadow of the Missing Owner  3 Staying In or Getting Out  4 Who Will This Book Help?  7 Chapter 2: Avoiding Seller’s Remorse  9 Why Are You Selling Your Business?  10 Retirement  11 Stepping Up  11 Getting Out from Under  12 Partial Exits  13 Your Goal Is to Maximize the Value of Your Business  14 Not Every Business Can Be Sold  14 Can I Sell My Business If It Has “Warts”?  17 Why Do I Need to Position My Business to Sell It?  19 I’m Really Busy—How Much of My Time Will It Take to Prepare My Business?  21 How Long Will It Take to Sell My Business?  22 And a Final Consideration  23 Jim’s Bakery Example: Overview  23 Chapter 3: The Sales Process  27 Sales Process Tasks  28 Breaking Down the Steps  29 The Decision to Sell  30 Identify Your Transition Team  30 Position Your Business  31 Interview Bankers and Brokers  31 Listing  32 Prepare Marketing Materials  32 Create a List of Potential Buyers  32 Qualify and Down Select Buyers  34 Letter of Intent (LOI) and/or Purchase Agreement  34 Buyer’s Due Diligence  35 Closing  37 Transition Support  37 Chapter 4: Start Thinking about the Value of Your Business  39 Make Sure Buyers Have the Correct Image of Your Business  39 Does Your Business Have “Curb Appeal?”  40 Be Prepared to Demonstrate Your Business in Operation  43 Talking to Your Employees  44 Jim’s Bakery Example  47 Chapter 5: Who Are Your Buyers?  49 Business Buyers Are Not Impulse Buyers  49 Qualified Buyers  50 Looking for Strategic Buyers  51 Looking for Financial Buyers  53 Get to Know Your Buyer  54 Be Open to “Earn-Outs” and “Stock Swaps”  55 A Word about Ethics  57 Jim’s Bakery Example  58 Chapter 6: Marketing Your Business  61 Where Are Buyers for Your Business Going to Be Found?  61 How Will You Market Your Business?  63 Getting Professional Help  63 Selecting a Sales Agent/Intermediary  64 Having Your Say  65 Marketing Materials  66 Market Relevance  66 Know Your Competition  69 Markets Are Dynamic  71 Your Business Is for Sale. Shhhh, Be Quiet, Shut up!  72 Down Select  73 The Single Buyer Slump  75 Jim’s Bakery Example  76 Chapter 7: Preparing for a Due Diligence Financial Assessment  77 If You Want to Sell Your Business Get Your Head out of the Financial Sand  78 Putting your Financial House in Order  81 The Dichotomy Dilemma  84 Recasting Your Financials  86 Third-Party Audits  87 Looking Toward the Future  88 Future Performance Should Be Based on a Solid Foundation  90 Jim’s Bakery Example  93 Chapter 8: Preparing for a Due Diligence Legal Assessment  95 Legal Positioning Casts a Wide Net  97 Create a Milestone Calendar  98 Government Regulatory Compliance  100 Intellectual Property  101 Patents  101 Trademarks  102 Copyrights  102 Intellectual Property (IP) Assignment  102 Capturing IP  103 IP Violations Can Cost You  104 Jim’s Bakery Example  105 Chapter 9: Preparing for a Due Diligence Operations Assessment  107 Start an Internal Risk/Opportunity Management Program for Your Business  109 What Is the Scope of the Enterprise?  111 Preparing for a Customer Satisfaction Infrastructure Assessment  112 Preparing for a Production/Services Infrastructure Assessment  113 Preparing for a Sales and Marketing Infrastructure Assessment  114 Preparing for an Organizational Infrastructure Assessment  116 Prepare an Organization Chart  116 Don’t Overlook the Informal Organizational Infrastructure  118 Preparing for a Personnel Infrastructure Assessment  119 Preparing for a Financial Operations Infrastructure Assessment  121 Preparing for a Legal Operations Infrastructure Assessment  123 Preparing for an Information Management Infrastructure Assessment  124 Preparing for an Institutionalized Processes Infrastructure Assessment  126 Jim’s Bakery Example  127 Jim’s Production/Services Infrastructure Preparation Example  128 Jim’s Sales and Marketing Infrastructure Preparation Example  128 Jim’s Organizational Infrastructure Preparation Example  128 Jim’s Bakery Personnel Infrastructure Preparation Example  129 Jim’s Bakery Financial Operations Infrastructure Preparation Example  130 Jim’s Bakery Legal Operations Infrastructure Preparation Example  130 Jim’s Bakery Information Management Infrastructure Preparation Example  130 Jim’s Bakery Institutionalized Processes Infrastructure Preparation Example  131 Chapter 10: Due Diligence  133 Due Diligence Is a Continuation of Negotiations  133 The Due Diligence Process  134 Document List  135 Preparing an Asset List  136 Tangible Assets  137 Intangible Assets  137 Preparing for the Due Diligence On-Site Assessment  138 It’s a Good Time to Build the Relationship  139 Post–On-Site Activity  140 Jim’s Bakery Example  141 Chapter 11: Describing Your Business Model  143 Prepare an Elevator Speech  144 Prepare a Written Description of Your Business Model  144 Beware—Business Models Change  146 The Franchise Business Model  148 Strategic Decisions Should Be Tested by the Business Model  148 Business Models Affect Valuations  150 Make an aaS of Yourself  151 Jim’s Bakery Example  152 Jim’s Bakery Business Model  153 Chapter 12: Writing Your “Book”  155 Your Book Is a Business Plan and a Marketing Proposal  155 Using a Third Party to Write Your Book  156 Generating Content for Your Book  157 Your Book Provides the Pith of your Business  157 How Long Should Your Book Be?  158 Book Outline  160 Overview  160 Market  161 Competition  162 Business Model  162 Product Descriptions  163 Sales Performance and Projections  163 Operational Description  163 Financial Summary  164 Protecting Your Work  165 Create a Short Handout  166 Jim’s Bakery Example  166 Chapter 13: Create a Virtual Model of Your Business  167 Your Financial Reports Should Be Your Greatest Sales Tool  168 Creating a Spreadsheet Model of Your Business  169 Use Linked Spreadsheets for Greater Fidelity  170 Monthly “Actual” Input  172 Jim’s Bakery Example  172 Chapter 14: Valuation  177 Financial Analysis and Certified Appraisers  179 Value vs. Price  180 Use Caution Applying Metrics  181 Automation Can Help  183 How Can a Professional Appraiser Help You?  183 Valuation References  185 Jim’s Bakery Example  185 Chapter 15: Partners, Vendors, and Other People Who Care  187 Cleaning up the Ownership of Your Business  188 Prior Investors  190 Outstanding Debt  191 Vendors and Critical Suppliers  191 Remove Any Blurred Lines  193 Chapter 16: Who Are the Deal Makers?  195 Finding Professional Help  195 Business Brokers  196 Investment Bankers  197 Types of Buyers and Investors  198 Banks  198 Venture Capital Companies  198 Angels  199 Beware of Sharks  200 Chapter 17: Loose Ends and New Beginnings  201 Transition Planning  201 Future Insurance Needs  202 Buyers Change Hats, and You May Too  203 Taxes  203 Asset vs. Equity Sales  204 Lock-outs  205 Taking the High Road  206 Become a Consultant  206 Appendix A: Example Marketing Handout  209 Appendix B: Example “Book”  211 Index  231