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Giving Your Business ESP SM

Giving Your Business ESP SM. Chris Andersen President 425 Market St., #2200 San Francisco, CA 94105 415-648-5517 Chris@AtlasBA.com. What is Business ESP SM. Exit Strategy Plan. Business ESP SM Essentials. Determine When and Why to Sell. Understand Valuation Drivers for Your Industry.

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Giving Your Business ESP SM

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  1. Giving Your Business ESPSM Chris Andersen President 425 Market St., #2200 San Francisco, CA 94105 415-648-5517 Chris@AtlasBA.com

  2. What is Business ESPSM Exit Strategy Plan

  3. Business ESPSM Essentials • Determine When and Why to Sell. • Understand Valuation Drivers for Your Industry. • Prepare the Business for Sale. • Know Who Can Buy Your Company.

  4. 1. Why to Sell • Burnout • Approached by Buyer • Diversify Wealth • Other Venture • Reached Limit of Resources • Retire • Death, Divorce or Disability

  5. 2. Valuation Drivers • Buyers Competing for Your Company • Differentiated Products or Services • Outlook for Your Industry • Transaction Structure • Type of Buyer • Strength of Your Business (Financial & Operational)

  6. Example: Little Things Make a Difference Company A • Business Services • Revenue at $10.3M, +3%/yr. • $1.25M EBITDA • $950K assets (poor controls) • Loyal employees • Limited management team Company B • Business Services • Revenue at $9.7M, +12%/yr. • $1.5M EBITDA • $400K assets (good controls) • Loyal employees • Good management team Valued at 4.0x EBITDA, or $5.0M Valued at 5.5x EBITDA, or $8.25M Company B Worth 65% more, or $3.25 million.

  7. 3. Prepare, Prepare, Prepare Tell a Credible Story that Holds Up Through Due Diligence. • Makes the Process Easier • Leads to a Higher Price • Time the Market for Your Industry

  8. Tell the Story • Good Growth Prospects • Strong Key Performance Indicators - Industry • Proven Trends & Profitability • Good Management Team • Repeat Customers w/ Low Concentration • High Employee Retention

  9. Prepare for Diligence • Well-maintained Financial Records & Controls  Including Inventory or Materials • Strength of External and Internal Agreements • Documented Policies and Processes • Mitigate Litigation or Environmental Issues • Compliance – Regulatory, Accounting, etc. No Negative Surprises.

  10. Advisors Merger & Acquisition (M&A) Advisors Transaction Attorneys Tax Planning Accountants Financial Advisors Facilitate Meetings to Communicate Your Goals with Entire Team Build a Team

  11. 4. Types of Business Buyers • Financial Acquirer • Private Equity Group (Complete or Partial Sale) • High Net Worth Individual • Strategic Acquirer • Competitor • Company in Complimentary Industry

  12. What Strategic Buyers Want Sell All of Co. • Innovation (New Products, Services or IP) • Looking for Synergies • Customers • Grow Revenue or Cash Flow • Geographical Expansion Expect a New Culture

  13. What Financial Buyers Want Sell All or Part of Co. • Returns on Invested Capital (20+% irr) • Strong Company with Growth Opportunities • Continuity/Succession for Management Culture Often Preserved

  14. … And in Conclusion • Determine When You Want to Sell • Understand the Drivers (and Detractors) of Value • Prepare Your Business For Sale • Position Your Company to Appeal to the Right Buyer

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