We are about halfway through January and if you are like most folks, you are starting to struggle with keeping your 2018 New Year’s Resolutions (NYRs). Whatever your personal and professional NYRs were, we hope that you are extremely successful in reaching those goals!
One NYR we hope every business owner takes to heart and works on diligently in 2018 is the goal of building a “buyer ready” business, or at least getting on the path to this.
Why do we stress this?
Because it is far better for you to exit a business when you want to rather than wait for external circumstances, many of which are well beyond your control, force you to. These scenarios are similar to “fire sales” which according to Investopedia means:
Selling goods or assets at heavily discounted prices. Fire sale originally referred to the discount sale of goods that were damaged by fire. Now it more commonly refers to any sale where the seller is in financial distress. In the context of the financial markets, a fire sale refers to a situation where securities that are trading well below their intrinsic value.
So by its very definition, you want to avoid a fire sale because the buyer is ultimately in control of not just the valuation, but also the terms and conditions of the sale. Which is bad news indeed!
How do you control your exit?
By creating a plan for a buyer ready business and by taking steps in advance of going to market to reduce the risk associated with your company.
How do you do that?
The good news is that you don’t need a PhD or even an MBA to effectively prepare and build a buyer ready business. If you focus on these three areas, you will be making great strides in assuring buyers that your company has a long-term future:
Now granted, each of these will require your time to produce results. But trust us, based on our years and years of experience, if you begin developing a middle management team and delegating key decisions to them, you will improve your standing in the eyes of buyers.
If you drill into the sources of your revenue and create incentives for your sales team to bring new clients on board so none of your clients are over 20% of your revenue, you will reduce the risk associated with your opportunity.
And finally, make the investment in people and software to ensure that you have no gaps in your accounting system. Produce monthly P&Ls and balance sheets that all roll up into a year-end process of reporting that is clean and accurate. By doing this, you will significantly enhance your company’s salability.
OK sounds simple so far…
Now let’s talk about the 800-pound gorilla in the room: Most entrepreneurs love the excitement of founding and growing an enterprise. However, what they don’t enjoy is taking a $5 million revenue company to $25 or $50 million because achieving that sort of growth will definitely require you to focus on the three areas listed above.
But is it worth it?
Absolutely! The difference in valuation between two companies doing $5 million in revenue, in the same industry, where one is “buyer ready” and the other is not can be extreme. And not only the value paid, the structure of the deal can vary dramatically too. If your business is not buyer ready, you may be saddled with contingent payments in the form of an earnout, which may lock you in for 3-5 years working for the new owner to reach the company’s goals.
A great way to learn more about how buyers think about risk and how to mitigate risk associated with your business is to attend a Generational Equity exit planning conference. These highly educational meetings are presented by serial entrepreneurs for other serial entrepreneurs.
Trust me, you will learn a significant amount about exit strategies, company growth, and what it takes to build a buyer ready business by attending. Here is what a few of our clients feel about the conference they attended:
If you are interested in expanding your understanding of how to make your company more attractive to buyers, contact us at 972-232-1121, or reach out to us on our contact page and we will be in touch. If you would like to see if we are going to be holding a conference in your area, please follow this link to look at our schedule.
And good luck with all your New Year’s Resolutions, but especially the really important one: Building a buyer ready business.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
By submitting my name electronically and clicking the “submit” button, I understand that I am providing Generational Group, Inc., Generational Equity, LLC, Generational Capital Markets, LLC, DealForce LLC, their affiliates, representatives, contractors, etc. (“Generational Group”) my telephone number, which may include a number that is wireless and/or a number that is on a national, state, or other Do Not Call registry or list. I hereby consent and agree to receive telephone calls including any autodialed and/or pre-recorded telemarketing calls and/or text messages (telemarketing) from or on behalf of Generational Group at the telephone number provided. I further consent and agree that telephone calls may be made using automated technology such as an automatic telephone dialing system, artificial or prerecorded voice, or SMS text messaging. Consent is not a condition of purchase. I further warrant and represent that any telephone number provided is not on any state or national Do Not Call Registry and that by agreeing to these terms and conditions that if any number provided is on any such registry, I hereby consent and agree to receive telemarking calls and/or communications including any phone calls, text messages, URLs, links, emails, etc. to the telephone number(s) and/or any e-mail addresses provided. I understand that by entering my name in the electronic form provided, that I am signing my name as equally as if it was my handwritten signature and that it is my intent to provide an “electronic signature” as that term is defined in state and federal law, as well as industry practices for e-commerce.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.
Success, you have been added to our list.
it all started with a conference.
start your story today,
speak directly with one of our senior advisors +1-972-232-1121