Mercer Capital’s Travis Harms wrote a series of four whitepapers under the umbrella of Corporate Finance in 30 Minutes. In this series of white papers, Travis makes something that can sound arcane and difficult, like corporate finance, accessible for business owners and advisers. The first paper is an introduction to corporate finance for private businesses and introduces the three key questions of corporate finance that owners of private businesses face. The subsequent whitepapers address these key questions.
More than a decade ago, Richard Jackim and Peter Christman wrote a book called The $10 Trillion Opportunity. In the book, the authors forecasted massive future sales of private businesses because of the aging of baby boomer business owners. They were right in that there were millions of aging business owners. However, they were early in their prediction of a tsunami of private company sales by those baby boomer owners. Now, more than ever, business owners should be preparing themselves, and their businesses, for the next transaction wave.
Is business ownership a binary thing? Do we either own our businesses or not? The binary notion leads business owners to think either in terms of the status quo or of an eventual sale of the business. 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 and facilitating both ownership and management transition
On Monday, July 25, 2016, Verizon announced the acquisition of the operations of Yahoo for $4.8 billion. I waited on this post because it really isn’t about Yahoo, but about lessons for closely held business owners and their advisers. In any event, that $4.8 billion value for Yahoo’s operation was a far cry from previous indications of value for Yahoo.
The creation of buy-sell agreements involves a certain amount of future-thinking. The parties must think about what could, might, or will happen and write an agreement that will work for all sides in the event an agreement is triggered at some unknown time in the future. This post addresses nine important characteristics of buy-sell agreements that are important for business owners and for attorneys advising them.