26 Feb Could Your Business Use Some Curb Appeal?
If you have ever sold your home, you are probably familiar with the term “staging.” Staging is the process of giving your home curb appeal, depersonalizing it, de-cluttering it, making needed repairs, and putting it in its best condition—all in all, making it SHINE! Top realtors agree that the first impression is crucial; after all, there is only one first impression. You have to entice potential buyers to take a closer look inside. Better yet, you want them to fall in love with your home and offer their highest price on your terms.
But what if what you were considering selling wasn’t a home but your business? Is there such a thing as “staging” a business? The answer is a resounding yes. To accomplish a successful sale in this very competitive marketplace, dressing your business for success can have a dramatic impact on your price, the time to a transaction, and making your business one of the fortunate one in five that actually sells. Unlike preparing a home for sale, staging your business is far more complex, requiring a much longer preparation time, thought, and independent guidance. These critical issues must be addressed whether you are considering an internal sale to a management team, an ESOP, a private equity group or to a synergistic third party.
As with selling a home, selling your business requires ensuring high curb appeal through depersonalization. But a business that is owner dependent lacks this crucial element for potential buyers. Those looking to acquire a business want evidence that it will continue to function effectively when the owner is no longer around. So creating a succession play is critical for a successful sale of your business. Many business owners mistakenly think that succession, transition and exit are all synonymous. Not the case. Succession is replacing the owner in the business while transition refers to changing the owner’s relationship with the business, maybe working less, and exit is removing the owner from the business. In order to accomplish any of these, you must not only develop a quality management team but also empower them. This is of the utmost importance. Even if you have had a management team in place for years, can you leave the business unattended for extensive periods of time? Do they function as a true team? Succession does not happen by accident or quickly; it is actually the final act of a great leader.
Most business owners have achieved success because they have been the driving force of their business for many years. Unfortunately, this may be the same fact that makes the business dependent upon the owner. This close reliance must change in order to develop a business that will be attractive to an acquirer. Even if you plan on providing long-term consulting for the business or providing a lengthy transition period, these areas have to addressed and corrected prior to considering any type of transition.
What about repairs and improvements? Certainly, undertake these for the premises for that all-important first impression. But what about internal repairs? Are your financials audited and prepared according to GAAP? Are your employment agreements, contracts, and non-compete agreements current and adequate? What about your buy/sell agreements with any other shareholders? What about your corporate records? What about systems and processes? Are they well documented? Have you performed a recent inventory? This represents just a small sampling of the multitude of items that will be scrutinized during a buyer’s due diligence period. Will you be ready?
Most business owners spend their lives managing and growing their business but no time planning their liquidity event. In addition, owners give very little thought to what they will do with their time after their transition. Even though on the surface the idea of spending a lot less time at work is appealing, unless you are truly prepared for the transition, it can be less than perfect. Some people experience a sense of loss after they have transitioned out of their business. Although normal, this can be managed by the process of creating a successful and fulfilling plan for the next chapter of your life.
Also, it is equally important that the transition planning process be done in a holistic, integrated manner considering your business and personal goals. After all, your transition should accomplish your goals and objectives, not only short term but long term as well. What about family, key employees, and any philanthropic or charitable wishes? All of these considerations require a well-thought-out transition plan utilizing the tax code to your advantage, allowing time to implement any changes, and having a clear understanding of all of your possible transition options along with their unique pros and cons.
If you think this seems like a lot to consider, it is! Preparing a business for a transition or sale is no easy task. Just as you benefit from staging a home, you will reap the rewards from doing the same for your business—presenting it in the best light by preparing and planning. The ultimate transition or sale of what is most likely your largest asset and the biggest transaction of your life requires no less
At BTA, we know many owners will be attempting to transition out of their business in the next 5-15 years, and those who are adequately prepared with a planned transition in place will have a distinct advantage over those owners who have left their largest transaction to chance. This can mean the difference between ultimate success and failure. One of the biggest challenges we face as advisors is motivating someone to take action. This can be especially true with business owners who are consumed daily with running their business and navigating the day-to-day challenges. Taking care of their own needs most often takes a back seat to the needs of their business sometimes, to their own detriment.
At BTA we recognize this need and have created proprietary tools, education and resources all designed to motivate owners to take necessary action. We recognize this need is growing as owners seek to retire, and therefore, we are offering our partners the opportunity to work with us in order reach the marketplace. Our goal for the Transition Partner Program is to assist your current and prospective owners achieve a successful planned business transition and support and enhance your practice by having access to our established tools, resources, education, and consulting.
Our New BTA Partner Program™ provides you:
- tools and resources specifically designed for ease of implementation and use;
- access to proprietary tools designed to provide your clients with great benefits;
- access to outstanding owner-educational programs;
- additional resources to facilitate meaningful conversations with owners;
- possibilities where you may have thought previously none existed;
- the opportunity to generate additional revenue without additional cost, staff, or work.
Please click here to earn more about our partner program, BTA Partner Program. In addition, you can also Register Here to attend our next informational webinar, March 2, 2015 at 2:00 p.m. ET, which will provide information about the program benefits and collaborative team opportunity.
Kathleen Richardson- Mauro, CFP, CBEC, CM&AA