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Monthly Archives: October 2015

The 9 ways to leave your business

Article by Eric Purvis, Director of TAA Planning.

 

 

You might remember Paul Simon saying there were 50 ways to leave a lover. But if you’re a business owner thinking about how to leave your business you really only have nine options to consider:

Sell or give your company to a family member
Sell your business to one or more key employees
Sell to your employees
Sell your business to other shareholders
Sell to an outside third party
Bring in an outside investor and keep a minority interest
Go public
Hire a management team to take over and become a passive owner
Liquidate your business

Determining exactly which option is right for you is a challenge many business owners put off until it is too late. Opportunities disappear as time passes. If you wish to leave your business on your terms and in your own timeframe, you need to be proactive about understanding your exit options.

I recommend a four-step process to determine which exit option is best for you. This process will ensure that your exit options are consistent with your personal goals and take into account the realities of your company and the marketplace.
Choosing a Path
1. Set Personal Goals.
You need to identify your most important objectives; both in terms of financial goals and non-financial goals. Ask yourself, amongst other things:

How much money do I need from the exit to ensure my family’s financial security?
Do I want the company to stay in my family?
Do I want to my key employees to be rewarded during the exit?
Establishing well defined and written objectives is […]

October 15th, 2015|Business Learning|
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Where’s the value in your business?

Article by Eric Purvis, Director of TAA Planning.

 

 

 
Where’s the value in your business?

In order to gain some freedom from the demands of your business, or if you’re planning to exit, it’s critical to accelerate the value of the business. So let’s get some things straight about business value.

Let’s start with two facts about value:

Most businesses are not saleable and don’t make it through the second generation.
Income doesn’t automatically translate to value.

These two facts tell you something important – value isn’t something your business just has. The value in your business, while you are giving 100% to your business, tends to reside in you. Therefore, value is something you need to separate out from you, create and enhance in your business so it can operate with less involvement from you.

There are a set of major steps that can be applied too almost any business to determine value and plan its acceleration. These steps are:

Create a recast income statement and balance sheet;
Do a complete financial analysis;
Pull benchmarking data about industry performance and recent trade multiples;
Complete an Enterprise Value Assessment (EVA) which scores the business attractiveness and the owner’s personal, financial and business readiness; and
Correlate these scores with the business valuation and financial analysis.

Obviously these are complex processes that will probably require assistance from a professional. But the outcome is vital information. The process I’ve just described delivers this information:

A specific and qualified list of personal, financial and business strengths and weaknesses, correlated and used to justify present value and potential value;
A dollar […]

October 6th, 2015|Business Learning|
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