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Value Creation Blog

4 Reasons Advisors Like Exit Planning

Exit resized 600I find that anytime I write about ways for business owners to back off and make their businesses more valuable the topic of exit planning seems to come up.  It’s not that I dislike exit planning, I just find it interesting that advisors often think that activities that make a business more valuable are done to get the business ready to sell.

I find that most business owners don’t make their businesses more valuable because they want to sell them.  You make your business more valuable because there is a certain amount of fun and profit involved in making your business worth more.

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Topics: business coaching, exit planning, business exit planning, advisors


How to Fund Your Stay Bonus

Stay Bonus Transition PlanningA stay bonus is extra compensation you pay a key employee if one of three triggering events happens.  Whether you transfer ownership of the business, die, or become disabled a stay bonus can be key in helping your business retain its value.

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Topics: for business owners, exit planning, business exit planning, stay bonus


Is An ESOP Right For You?

ESOP resized 600Every business owner I’ve talked with is interested in ESOP’s.  On the surface an ESOP (Employee Stock Ownership Program) looks like a way to sell your business, pay no taxes, and stay in control of your business until you no longer want to be in control.  Like anything that looks too good to be true often an ESOP sale just doesn’t work out the way they initially look.

There tends to be two reasons people do ESOP transactions.  Owners who sell their companies to an ESOP often can’t find a reasonable buyer or they want to perpetuate a culture they’ve developed.  I find that when both are part of the ESOP transaction owners often enjoy the best of both worlds.

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Topics: ESOP, business exit planning, selling


7 Things You Can Do If Your Business Is Not Saleable

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Topics: for business owners, exit planning, business exit planning, leaving your business


The Planning Side Of Exit Planning

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Topics: communication, wealth management, exit planning, business exit planning, selling


Help! Will I Ever Retire? A Roadmap For Micro-Businesses

micro business resized 600The vast majority of businesses in the US are micro-businesses.  A micro-business is a business that has five employees or less.

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Topics: retirement planning, wealth management, exit planning, business exit planning, selling


Selling Your Company? Make Sure You Have A Stay Bonus

Stay Bonus resized 600My friend Rob Slee calls selling a privately held business the bizarre bizarre.  I agree with him.  I’m amazed that any business ever sells.  Most of the time when a deal falls apart it’s because the owner has not prepared his business and or himself for the sales process. 

Owners need to realize what the needs of buyers are if they’re to have a successful sales transaction.  It’s easy to concentrate on what we want, but a successful sale often revolves around buyers’ needs and not sellers’ needs.

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Topics: for business owners, exit planning, business exit planning, stay bonus, selling


You’ve Decided to Sell Your Business, Now What? – Business Exit Planning

Exit Planning Team resized 600You’ve made the giant decision; it’s time to sell your business.  Do you just hope someone comes and gives you two tons of money for your business or do you put together a team that can help you achieve your goals?  I vote for the team that can help with your goals.  Here are the people I think are important in helping you execute a successful sale and exit from your business.

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Topics: exit strategies, business exit planning, Team


5 Things Your Clients Need to Know for Exit Planning

If you are an advisor and work with business owners and have Clients who are over fifty yearsBusiness Exit Planning old, they are thinking about how they will leave their business.  When asked about their time frame for an exit, they will usually say they want to leave their business in five years.  If you come back and ask them three years later, they will still say five years.

I call this phenomena “perma-five”.  Business owners live in perma-five because they know there are things they need to deal with in their business but haven’t come up with a strategy or an understanding of what those things are.

I find there are five areas that business owners need to focus on if they ever want to change their relationship to their business and leave perma-five.  These areas are:

Understanding what they need financially.

Business owners can’t often sell their business and ride off into the sunset.  Once a business is sold, the ending capital will provide less than 20% of the income the owner had before they sold their business.  A financial plan showing this change in income is crucial in the planning process.

Knowing what the business is worth

In many instances the owner of the business will think the business is worth three to five times it’s real value.  If we help our owner Clients understand how buyers value businesses we can help them understand the importance of owning the real estate they operate their business in and why maximizing their qualified plan contributions is important.

Understanding the value drivers of their business

Most business owners are stuck in the tactical details of their company.  Helping them more to operational irrelevance in their business will allow them to start acting strategically in their business.  Certain strategic actions can add a tremendous amount of value and cash flow to the business.  Helping owners understand what those strategic actions are is very important.

Know who the business will be transferred to

In most instances an internal buyout or a move to a passive ownership strategy is the most advantageous for our private business Clients.  Understanding how both of these strategies works can provide real value for our Clients.

Keeping their key people

The concept of working with a “stay bonus” is important for having key people stay with our Client’s company.  Whether there is a third party sale or a passive ownership strategy pursued, having key people in place is crucial if one is to have a successful transfer strategy.

Helping our Clients move from “perma-five” to a real strategy for building value that allows them to change their relationship to their business is a key in working with private business owners in a wealth management relationship.  Having an understanding of the five topics above can go a long ways towards becoming the most trusted advisor for our business owner Clients.

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Topics: business relationship management, business exit planning, for advisors, Exit planning for advisors


Mock Due Diligence Is A Good Step For Exit Planning

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Topics: for business owners, exit planning, business exit planning, selling, due diligence


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