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Twitter:
twitter.com/johnmartinka
My blog:
www.johnmartinka.com
I recently was featured
on 97.3 KIRO radio's CEO Spotlight with Jason Brooks. Here's a link to the
broadcast:
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John Martinka interview |
“John is the guy who helps execs buy a
business™” – While helping me formulate my business growth strategy, a group
of people who have referred clients to me and worked with me on deals came up
with this. Keep this in mind for when you meet people who want to buy a business
– preferably a mature, profitable and fairly priced business; there is nobody
who knows, specializes and understands this market better.
The first 100 days™ - this is the most important time post-acquisition.
It’s important that the buyer have a transition plan (created prior to closing),
to start implementation the day after closing and to stay on track. I help
buyers during this all-important “First 100 days” whether or not I assisted the
buyer with the deal.
Second opinion – sometimes all it takes is the objective business advisor
who has seen hundreds of deals to be the “other set of eyes” that a buyer needs.
My eyes may spot risk, opportunity or both. I have maintained for years that I
can add as much value to someone who has already found a company to buy as I can
when I help clients locate, analyze and structure a deal. It just takes less
time and less money. Think of me when somebody you know wants to get a deal done
(and/or stay out of a bad deal).
Preparing for Your Great Escape- Putting companies through a mock due diligence — to find any holes a
buyer would drive a truck through — can increase the value, price and
downpayment; and streamline any future sale. It doesn’t matter if that sale is
in six years or six months; if the seller will use an intermediary or not; or if
the business will sell to family, management or an outside buyer.
Growth by Acquisition – double sales in a year? Yes! Buy a competitor,
supplier, customer or even a business in a different industry. This is not
mega-corporation M&A; this is small and mid-sized businesses buying another firm
to fill capacity, add customers, add a geographic area, find good talent or to
find synergies and reduce overhead. When “L” bought “S” they were able to sell
their products to S’s customers, S’s product to their customers and move the
operations into their facility. As a bonus they got a proven sales staff.
Also check out these blogs:
The Business
Seller
Advocate
Blog
The Business
Buyer
Advocate
Blog
This website only promotes the BEST business brokers and the BEST businesses for
sale ONLY
We are recruiting
“Partners” in every state.
Please see more on this at the end of this e-newsletter. |
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Issue 133 - Case Study - Escape Your
Business With Style, Grace and More
Money
Client Spotlight - National
Concrete Cutting, Milton, WA
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National
Concrete
Cutting,
Inc. (Matthew
Finnigan,
owner)
National
Concrete
Cutting Inc.
is a union
affiliated
concrete
sawing and
drilling
company
headquartered
in Milton,
WA. Founded
in 1946
under the
name of
National
Concrete
Sawing, the
company is
known for
its
reputation
for superior
industry
knowledge
and quality
customer
service.
Operating
throughout
the greater
Puget Sound
region, NCC
is available
24 hours a
day, seven
days a week
to ensure
that the
work
required can
be done with
the least
interference
to the
customer’s
schedule.
Working as a
licensed
general
contractor
in the state
of
Washington,
National
performs
diamond
sawing and
drilling
work on
concrete,
asphalt,
brick and
masonry
surfaces.
Main
services
include flat
sawing, core
drilling,
wall sawing
and hand
sawing.
NCC employs
between 15
and 20
people full
time and has
a complete
and well
maintained
array of
equipment
and trucks
that enable
the company
to respond
to customer
needs in a
prompt
manner.
Included in
the
equipment
fleet are
saws and
drills that
operate
hydraulically,
on gas or
diesel
power, or
electrically
thus
enabling the
firm to work
indoors or
outdoors,
including
while
buildings
are
occupied. |
Sell your business
for more than you imagined
|
Have
a plan
- When
speaking to
a group I
will draw a
Venn diagram
with three
circles. One
circle is
"Vision,"
another is
"Plan" and
the third is
"Implement."
If you are a
cross
between
vision and
implement
you get no
results. If
you are a
cross
between plan
and
implement
you have no
destination
and you'll
get lost. If
you are a
cross
between
vision and
plan you'll
be stuck
because
there is no
action. It's
only in the
middle,
where all
three
circles
intersect
that you can
sell your
business
faster and
for more a
higher
price. |
Who will buy your business?
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“Nobody is
going to buy
your
business” is
a statement
that can
deflate an
owner with
devastation
as similar
as the
Hindenburg’s
exploding.
George (not
his real
name) was
referred to
me by his
CPA as he
was
interested
in selling
the business
he had
started a
decade
earlier. We
had a
thorough
discussion
about the
business and
I reviewed
five years
of the
company’s
financial
statements
and tax
returns. It
was at this
point that I
made the
above
statement.
The
company’s
sales and
profits had
been on a
roller-coaster
ride.
Six-figure
losses one
year and
six-figure
profits the
next
although
never enough
to recoup
the prior
year’s loss.
The net was
that there
was a large
negative
retained
earnings,
accounts
payables in
excess of
cash and
accounts
receivables
plus
substantial
bank debt. |
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Treat your business like a business
You see,
George had an outside interest
(hobby) and when business was good
he got very involved with his other
interest until business became bad
and he was forced to return to
managing the company. The wide
swings in revenues and profits were
because George was the primary
salesperson for the company so when
he wasn’t working sales
declined. In other words, the
business had a huge dependency and
it was George.
This wasn’t the only problem with
the business. George had hired his
romantic interest, paying her an
executive salary for doing
administrative work and running
errands. There was no business plan,
no marketing plan and no budgeting.
Actually there was no planning of
any kind; everything was done on the
fly. It didn’t take very long to
figure out that we needed to do some
planning, budgeting and monitoring.
It pays to plan your escape
Our first
meeting was about July 1, a very,
very slow time for George’s
industry. Within a few weeks we had
a sales and marketing strategy
outlined and in place. I insisted
they monitor every activity related
to sales whether it be marketing
letters, telephone calls, in-person
sales calls, proposals, etc. For the
six weeks until Labor Day the
company turned into a marketing
machine (instead of just coasting
through the summer as they usually
did). Their last six months of that
year ended with sales 33% above
their forecast and that momentum
continued into the next year.
By the next summer George was
entertaining interest from two
industry buyers and one outside
buyer. He received an offer, which
he turned down. Now that there were
some systems in place, momentum and
consistent profits he decided he
didn’t “have to” sell and would
continue to operate and grow the
business, making small improvements
along the way. Five years later he
sold to a competitor for
substantially more than the offers
years prior. In fact, the
downpayment was significantly higher
than the price in the original offer
he received. |
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Conclusion
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Did George have a business or a
lifestyle? When we met it was
definitely a lifestyle, and an
erratic one at that. George also
did what a lot of small business
owners do and that is not pay
attention to the company’s
balance sheet. I recently met
the owner of a firm that had
significant debt (for their
size), was paying nice bonuses
and doing nothing to reduce
their debt. Now that it’s time
to sell the owner “needs” to get
enough money to pay off the debt
(whether the business is worth
this much or not, he “needs”
it).
This often happens because
owners see their business with
the optimistic glasses on.
Buyers want to see future growth
and cash flow. Bankers want to
see how they’re going to get
paid back. Business owners
should pretend they are buying
their own company and ask
themselves if they’d believe
what they’re being told. |
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This Month's Business Buying
Don't
(this one is especially true in
today's economy)—From
422 Business Buying Don’ts™
by Ted J. Leverette, “Partner”
On-Call Network LLC
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Don’t forget the most
important question. What is the
competitive advantage of this company? What are the dependable drivers that
create customer demand for its product? From these questions will come many
others. Follow the string until its end to discover the truth about the
business. Do these things before you buy it.
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See a Business Buyer Protection Report of more Business Buying Don'ts. |
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Getting the Deal
Done Audio
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Listen to a
live talk as
I tell
audiences (of the
leading advisors and dealmakers)
what it takes to close buy/sell
transactions. The talk is titled,
"Getting
the Deal
Done."
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Listen to
Audio
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“Partner” On-Call
Network is expanding
|
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Please
contact me
if you or
someone you
know might
want to be a
“Partner” in
our national
business-consulting
firm. It’s
an
opportunity
to own a
local office
and serve a
national
clientele
(without
traveling to
remote
clients). If
you have
anybody in
mind
(anywhere)
please call
or write me.
|
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New and/or
Upcoming
|
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http://twitter.com/johnmartinka
A blog at
www.johnmartinka.com
January 28 -
Without and Exit Strategy You
Have No Strategy for the Society
of Financial Service
Professionals, 7:30-10:00 am at
the Harborside
February 9 - Master
Builders Association on
Preparing Your Company for Your
Great Escape.
March (date TBD) Roundtable Discussion
with
Bernstein Global Wealth
Management.
Future topic ideas are
appreciated (and I will use them
if they are in my area of
expertise).
Please share this newsletter with your friends and associates. Have them e-mail me to get it directly. If you know of anybody who wants
to buy, sell or grow their
business please send them my
way. It will be very much
appreciated.
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Notices:
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The
Business Buy, Sell & Growth Advisor is free and you are welcome to
continue receiving it as long as you desire. If at any time you wish to not
receive this please follow the
instructions below from Constant
Contact. You'll receive no more.
I will not share your name and e-mail address with any other readers.
Feel
free to share or reproduce the information in this newsletter (in whole
or part) as long as my contact information and copyright notice is
given. Also feel free to share your comments and opinions with me, via
e-mail.
If you know
anyone else who would benefit from this valuable information on how to
buy, sell, grow or value a business please let me know and I will put
him or her on the list.
If you're receiving this indirectly and would like to
subscribe,
click her to e-mail me. |
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Copyright John Martinka, 2000-2011 All rights reserved.
John Martinka
"Partner" On-Call Network
An
Original Business Buyer
Advocate
®
The
Escape Artist™
Creating Large Exits for Small
Businesses
The Business Buy, Sell & Growth Advisor TM
www.johnmartinka.com or
www.partneroncall.com/johnmartinka
PO Box 8146; Kirkland, WA 98034
425-576-1814; fax 206-374-8262
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