Management transitions can be difficult. Most aging baby boomers simply don’t want to think about management transitions. But we have to do this for our own good and for the good of our companies and all of our stakeholders.
Is your business ready for sale? This is an important question for business owners and shareholders. Why? Companies that are READY for sale are more valuable than similar companies that are not. You also never know when you might be approached by an enthusiastic, or better yet, a motivated purchaser. If that day comes unexpectedly, you definitely want to be READY for sale. A company that is READY for sale is also ready to engage in leveraged repurchase transactions that provide liquidity for some owners and enhanced returns for others. A company that is READY for sale is capable of engaging in a leveraged dividend recapitalization, as well, to provide liquidity and diversification opportunities for all shareholders. And, a company that is READY for sale is also just more fun to work in. This post goes into depth about the components of R-E-A-D-Y.
Ownership transition can be difficult. It is not something that most business owners like to think about. We will all, inevitably, transfer our ownership to others, if only at death. This post discusses 5 situations business owners may find themselves in and the perils of failing to plan for an eventual transition.
Managing illiquid, private wealth in the context of The One Percent Solution requires a more active role for business owners and a different level of attention on the business itself. The truth is that between the two bookends of status quo and an eventual third-party sale are many possibilities for creating shareholder liquidity and diversification opportunities and facilitating both ownership and management transitions. This post examines several.
Having served as the third appraiser in numerous processes, I’ve learned from experience. The steps regarding the role of the third appraiser outlined in this post will not solve every problem. However, they will go a long way towards “fixing” processes that are otherwise broken, or badly bent.
The default valuation mechanism for many buy-sell agreements calls for the use of three appraisers to determine the price following trigger events. Such agreements have a variety of forms, but the goal of the three appraiser process is to reach a conclusion of the price for each transaction.
One reason many writers discuss leveraged share repurchases in general terms only is that they involve a company’s current income statement and balance sheet, as well as a pro forma balance sheets and income statements. Further, to see the impact on a company and its shareholders, the changes between the existing financials and the pro forma financials must be analyzed. This post presents an example of a leveraged share repurchase that will help bring the noted benefits for both a company and its owners, both selling and remaining, into clear focus.
In this post, we will examine another partial liquidity alternative for owners of closely held and family businesses, a leveraged share repurchase. This post will address conceptual issues. In the next post, we will develop an example leveraged repurchase transaction to illustrate these concepts and how they really work.
In this post, we discuss using a leveraged Employee Stock Ownership Plan (ESOP) as a means of obtaining partial liquidity from a business.
Marshall Goldsmith, the author and executive coach, wrote a little (in size only) book entitled Succession: Are You Ready? (Cambridge, Harvard Business Press, 2009). In it, he talks about letting go and moving on. His words should be taken to heart by many, if not most of us: “Almost all of the leaders who I have met assure me that they will be different. They confidently assert that they will have no problems letting go. You are probably delusional enough to believe that you too will be different. Take my word for it: while your desire for uniqueness may be theoretically possible, it is statistically unlikely. How business owners address this question is vital to the success of business transitions, and it is one that too often receives scant attention.” Are you ready to let go?
