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What's Your Business Worth?

Business Owners - M&A Firms - Financial Planners and Trusted Advisors

“40% of business owners unplanned exit strategy leads to liquidation ! That's right around 40% of all businesses end up in liquidation, so obtain extremely low enterprise value, with no goodwill at all. There is a systemic business ownership problem when considering many are relying heavily on the sale of their largest asset to support a retirement lifestyle. A personal value gap exists being the difference between what the owner’s business is worth and what their personal goals require it to be worth”

Andrea Sotgiu M.D Lavan

This year of 2020, the youngest baby boomers will turn 55 years old, and many baby boomer business owners, who own over 75% of the 6 million+ private businesses in the US with payroll, will want to transition their companies to new owners. Many will face unanticipated news, and recognize the largest asset they were relying on to fund their lifestyle is not worth what they thought.

M&A Professionals Surveyed

70% of M&A professionals surveyed said that business owners are minimally prepared or not prepared at all to sell or transfer their companies.

90% M&A professionals believe a business owner’s unrealistic expectation of company value and operational or market issues are the biggest obstacles facing business owners who want to sell or transfer their companies.

Survey Results

Most M&A firms’ will say their closing rates are extremely high. Some quote greater than 90% success rates, which means they are wisely very selective about which businesses they engage. M&A firms are transactional, meaning they collect revenue from each sale. They want to make sales, lots of sales. When approached by a prospective seller, it behooves them to turn away companies not well positioned.  

Equity and Succession Planning:

Data shows that 83% of equity and succession planning clients need to grow shareholder value in order to meet ownership’s personal wealth goals. Only 12% of companies secure LOIs for sale, and only 20% of LOIs survive the first pass at due diligence: that’s a 97.6% failure rate.

The earlier business leaders implement an Equity Plan the better.

Business Owners, Long Hours - Low Pay

The majority of small businesses owners have created a long hour low paying job for themselves where their business has less than $100,000 in annual owner’s discretionary cash flow, and if sold not worth a great deal. Only a small %, of business owners, create a business value of $500,000 or more and have at least $125,000 in owners’ discretionary cash flow.

Exit Planning - Succession Planning - Not so much

Most successful entrepreneurs become life style business owners meaning they live off their discretionary income and wide company benefits. To some degree complacency is pervasive, as too many do not prepare for transitioning, or a thoughtful exit strategy to support a lifestyle into the next phase of life after business ownership. Ultimately, they fail to plan to accelerate the company value and "sellability"to support their future desires.

40% of business owners unplanned exit strategy leads to  liquidation !  There is a systemic business ownership problem when considering many owners are heavily relying on a sale to support a retirement lifestyle. A personal value gap exists being the difference between what the owner’s business is worth and what their personal goals require it to be worth.

The Right Business Support Makes A Difference

You've worked hard to get where you are. You know how your business works, but with access to the right expertise, support and resources, you can unlock even more value.  

Building and growing a business requires leadership, a driving purpose, great people and access to the right support. Too often business owners' get stuck, and or sucked into minutia preventing them from working on their business. The right support, for many owners covers the whole lifecycle of their professional and personal journeys. The support team often includes a CPA, Financial planner, Attorney, Banker, and a trusted Business Advisor, with periodic event support from M&A, Valuators, but also other key subject experts from digital enterprise architects, to marketing and sales verticals, and a whole host of possible coaches.

Despite great preparation, planning, strategy, funding and performance systems success boils down to execution. Leadership holds the execution reigns and with the right support can elevate company performance and realize desired personal objectives. We work closely with, and are members of many “business owner supports teams” where we collectively help to close value gaps to ensure aspirational outcomes.

Solution(s) - Strategy Management Services

Tailoring services to bridge the gap unique to each client - We provide comprehensive solutions to bridge the business gap starting with diagnostics

We help owners and leaders execute providing support and deliberate, tailored strategic management services encompassing;

-       Diagnostics to enable you to know where you are. Our diagnostics benchmark you against the market using groundbreaking analytics, so you know exactly what changes to make - and why you're making them.

-       Strategy to tell you where you are going.

-       Business models to assure you have a validated way to get where you are going.

-       Performance management to help make evidence-based decisions, and if necessary adapt to continually get there ahead of the competition.

-       A way of operating to ensure execution and the business stays on track. ROSE is a framework with structure and governance, that helps business owners and leadership teams achieve the outcomes desired.

Advisors Collaborate

The anticipated liquidity event for baby boomer business owners is a systemic issue and one that CPAs, Attorneys, Financials planners, M&A, Valuators and any trusted advisors should be helping their clients navigate and solve.

We often collaborate with companies and people in these professions and other B2B firms to provide their business clients a suite of tailored services. We are interested to work with other B2B professionals to help ensure the most effective support brain trust and best business owner outcomes. We remain flexible on these arrangements.

Common Objectives of Companies we work with

-     Transform the company into a valuable, marketable asset

-     Prepare for successful M&A at the top of the range of values, and change the illiquid value into AUM

-     Acquisition ready

-     Growth - hit the ceiling not growing anymore

-     Improve control, and dependencies for a better quality of life, more personal time and peace of mind

Ready to talk?

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