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Nperspective CFO Services
, invites you to attend a Private Reception & Panel Discussion, November 11, 2015, 2:00 - 4:00 PM, at the Diplomat Spa & Resort, Hollywood, FL.
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Our Services:
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- Business & Strategic Planning
- Financial Reporting & Accounting Management
- Cash Flow Management
- Government/
Defense Contracting - Turnaround/Crisis Management
- Bankruptcy (Debtor and Creditor)
- Forensic Accounting/
Litigation Support - M&A/Due Diligence and Integration
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Our Offices:
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Orlando
5971 Brick Court
Suite 100-B
Winter Park, FL 32792
407.679.7600
Tampa
2202 N. Westshore Blvd.
Suite 200
Tampa, FL 33607
813.507.3600
South Florida 110 East Broward Blvd
Suite 1700
Ft. Lauderdale, FL 33301
954.651.8044
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| October 2015 |
Business Owners - Purposeful Ownership Transition Planning Can Mean Everything!
Geoffrey S. Gallo, ChFC, CExP
Vice President, Sales & Channel Marketing, Exit Strategy Consultant
A recent Business Owner Survey by Colorado-based Business Enterprise Institute1 revealed that 79% of all business owners expressed the desire to leave their businesses within 10 years. In this study, only 37% had any dialogue with an advisor about this inevitable event. The economic tumult over the last 8 years and the recovery in certain industries in the United States, in general and Florida, in particular, has created a significant need for business owners to seek out advisors who can quarterback what is the most important financial event in the owner's life - the transition out of their businesses.
Most business owners delay concrete discussion of this topic until something "happens" or they are approached by someone who asks if "you want to sell". Many successful business owners have grown accustomed to the lifestyle their business affords them. The business owner is often under the perception that since the business currently produces satisfactory lifestyle income, there is no immediate issue at hand. This erroneous thinking, that there is no noticeable underlying weakness, may impede the business' successful growth and eventual transition. However, to maximize the company's value upon their eventual exit, a great number of things must be in place. Coordinating these issues can be a daunting task. Oftentimes, the steps necessary to grow the business profitably into new markets, offer new products and services, create KPIs with corresponding compensation incentive plans, hiring capable manager/entrepreneurs, installing standardized systems and procedures, et al, can take many years. As 2015 comes to a close, I encourage you to begin a dialogue with us that will result in tangible and organized planning for your business exit.
Designing a comprehensive Exit Plan-based on your exit objectives and flexible enough to adapt to changing economic, business and personal circumstances-can be the difference between liquidating your company or selling it for a value that truly reflects the worth of the years of efforts to build a successful business.
Let's look at a real case study of two brothers, owners of an 80-year-old manufacturing company, who took over ownership from their father. The second generation owners were in their 70s. They had not properly planned for succession. The two children who were in the business did not have the skills to manage a global supply chain and do what was necessary to survive in a globally competitive marketplace. I met with the brothers and each had his son in the meeting. The company had always weathered the economic downturns over the years but currently their long-time customers were looking at other options for their needs, given the fact that they could now contact factories directly in foreign countries and buy their merchandise at lower cost. At this stage, the brothers were tired and they expressed concern that the grind of managing a multi-million dollar enterprise had finally caused them to ask the questions - What next? What should we do? For this family, the option of a possible sale to a third party would be very difficult, not only because neither brother was willing to remain with the company after a sale, but also because they had failed to develop a strong management team. Few savvy buyers will purchase a company without a great management team committed to remain after the sale. Transferring ownership to one or more key employees was also out of the question. None had been groomed to assume ownership responsibilities nor had the family taken action to fund this type of buy-out. The family strongly considered liquidation because their highly profitable company had little worth beyond the value of its tangible assets. If liquidation was chosen, dozens of employees would lose jobs and the family would be forced to leave millions of dollars behind. Fortunately, a small public company came forward with an offer and a deal was consummated. This smaller company was merged into the larger company and the two sons took over the new division. However, within months, it became clear that the sons had no leadership skills and were not equipped to operate in a public company environment. After 14 months, the merger failed. The sons, as well as their direct employees, joined the ranks of the unemployed.
What can you do to avoid this?1
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Plan Ahead. The issues above that were ignored by the brothers (among them grooming a management team and failing to plan) proved to be their downfall. If addressed in advance of the exit, situations like this can be resolved in a manner that is cost efficient, enables your business to be transferred and adds to the value of your business. In our experience, most owners with Exit Plans need five to ten years to implement all the strategies necessary to exit successfully. Owners without Exit Plans spend far longer than that waiting and hoping for a buyer.
- Set Measurable Goals. Your Exit Plan must set goals, provide accountability, and measure results. This is especially important when one goal is to protect and grow value, and minimize taxes.
- Incorporate Flexibility. Create a plan with the flexibility necessary to react quickly and effectively when the unexpected happens.
- Use A Proven Process. Ultimately, we suggest that you engage in a proven Seven Step Exit Planning Process™ that has helped thousands of owners to exit in style. One way to look at our Exit Planning Process is to associate each Step with a question. As you progress through the Process, you will be able to answer "Yes" to each one.
- Step One - Setting Exit Objectives: Do you know your retirement goals and what it will take-in cash-to reach them?
- Step Two - Determining Business Value: Do you know what your business is worth today, in cash?
- Step Three - Increasing Business Value: Have you identified the best ways to increase the value and cash flow of your company?
- Step Four - The Third Party Sale: Do you know how to sell your business to a third party without getting killed by taxes? (or)
- Step Five - Transfer Your Business to Insiders: Do you know how to transfer your business to insiders (family members, co-owners, or employees) for cash rather than give it away?
- Step Six - Protect Your Business: Do you have a continuity plan for your business should you die or become disabled?
- Step Seven - Protect Your Family: Do you have a plan to secure your family's financial security should you die or become disabled?
The thought and actions that go into answering these questions constitutes your unique Exit Plan. Over the coming weeks and months, I will share more detail concerning each Planning Step above, as well as other valuable concepts on Exit Planning Strategies.
Nperspective has assisted many clients in preparing their business for transition. Geoffrey Gallo is a member of Business Enterprise Institute and holds a Certified Exit Planner (CExP) designation issued through that organization. Its members develop and implement comprehensive strategies that lead to successful business owner transitions. Contact Geoffrey at 855.MYNPCFO (855.696.7236) or ggallo@npcfo.com for a complimentary consultation.
1. Business Enterprise Institute - "What's in a Good Exit Plan".
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Private Reception & Panel Discussion
Increase Your Chance of Success:
Preparing for and Accessing Capital
Sponsored by Nperspective CFO Services
November 11, 2015, 2:00 - 4:00 PM
You are invited to attend a Private Reception & Panel Discussion during the ACG Capital Connection Conference at the Diplomat Resort & Spa, Hollywood, FL. To view a web version of the flyer that also links to a two minute survey for the chance to be entered to win $200 click on this link:
The ACG Capital Connection Conference is November 10-12, 2015. The cost to attend the entire conference which includes the Private Reception and Panel Discussion, is only $200. For a link to application, email info@acgflorida.com
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About Nperspective
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Nperspective, LLC provides interim, part-time, and project CFO services using a flexible engagement model that is dependent on our clients' unique business needs. Our partners are seasoned CFOs who focus on rolling up their sleeves, are accommodating to client needs and helping create significant value from within their finance organizations.
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