Key Employees are Key to Your Exit

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When valuing a closely held business, I frequently pose the following question to the business owner: what do you think the business is worth without you?  A similar question can be asked in regard to key employees:  what is the business worth without your key employees?   If they are critical to the success of the business their possible departure represents… Read More

The Five Deadly Sins When Selling Your Business

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There are no Mulligans when selling your business.  Avoiding these “sins” will give you a good shot at executing a successful transaction. (1) Not Understanding the Value of Your Business Business valuation is not an exact science, but it remains an essential first step.  A good business valuation will help you understand what your business looks like from the perspective… Read More

Creating a Succession Plan for Your Family Business

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“All happy families are alike; each unhappy family is unhappy in its own way.” Leo Tolstoy Businesses controlled by a single family account for 50% of the U.S. Gross Domestic Product, include 35% of the Fortune 500 – both private and public companies – and are responsible for 60% of employment and up to 80% of the job creation in… Read More

Crowdfunding

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In 1997, fans of the British rock group Marillion began an internet campaign to raise funds to finance a U.S. tour. The campaign, which was not organized by the band, raised $60,000. The band picked up on this idea and in 2001, funded the production and distribution of its album Anoraknophobia by preorders from its fans without the involvement of… Read More

ESOP versus M&A: Choosing the best selling option

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Business owners looking to exit are often faced with the following dilemma: cashing out at a reasonable price is very important, but they don’t want their business swallowed up by a large industry player eliminating the identity of the business they have built. They are concerned that their employees are treated fairly as well. Business owners in this situation often… Read More

Boomer Bust

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Why exit planning is becoming more critical than ever Currently there are about 28 million small businesses in the U.S.—those employing 500 or fewer employees. Of these, about 19 million have zero or one additional employee. Of the remaining 9 million, 3.5 million are owned by persons younger than 50 or older than 70. Therefore, 5.5 million businesses are owned… Read More

The 7 Deadly Transition Sins

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Business ownership transitions are difficult. Many business owners will procrastinate and not take timely action. Here are some of the avoidable consequences. 1) Failure to have a solid buy-sell agreement for multi-owner businesses. Businesses without such an agreement are playing Russian roulette. If an owner dies, her estate might not have any leverage in obtaining a satisfactory price for the… Read More

Financial Tremors: Impact on mergers and acquisitions?

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On November 3, 2015, the S&P 500 Index (a better measure of the overall market than the Dow Jones Index) stood at 2,109.79. As I write (on January 14), the S&P 500 stands at about 1,880, a decline of almost 11%. What, if anything, does this mean for the valuation of privately held companies and the 2016 M&A environment? In… Read More

Succession among Professionals

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Managing a professional services firm Chuck Hufnagel is a professional engineer and in 1988 started his own firm. He specialized in land development and his clients included developers and a number of municipalities in the Philadelphia suburbs for whom he acted as a consulting engineer. Chuck had an excellent reputation and developers, architects and municipal officials loved to work with… Read More