Against the backdrop of the article, “A Missing Boom in Small-Business Sales” and my own thoughts on ownership and management transition, we consider not only why the wave of business transitions hasn’t fully occurred but also what you can do in the interim.
The moral compass at Volkswagen was evidently not set to true north. The easy way or the cheapest solution in the short run may well be the most difficult way and the most expensive in the long run. Let the example at Volkswagen be a call for all of us to reexamine our moral compasses, both as individuals and as those compasses get translated within our companies. Some of the best decisions are made when we simply say no to the easy road.
“Is Your Business Ready for Sale?” is one of the most pressing question facing business owners today. And the question is important for advisers to businesses, since we are instrumental in asking hard questions and, indeed, have the responsibility for asking hard questions of our private company clients. At the outset of a new series of posts, let me say categorically, I am not, not, not suggesting that your business should be up for sale. Bear with me while we focus on the actual question of “Is Your Business Ready for Sale?”
After reflecting about Periscope and its potential use for me as a new social media tool, I decided to give it a try. I decided that I’d conduct my own Periscope experiment, and did my first Scope last Friday. I’ll be talking about business valuation and ownership transition, the same topics I now blog about and speak about. View a video in this post of my first scope about “Basic Business Valuation.”
Shares of La Quinta Holdings (LQ) dropped sharply upon the surprise announcement on Thursday, September 17th, after the close of trading, of the the resignation of its CEO, Wayne Goldberg. The stated reason for the resignation was “mutual agreement.” Mr. Goldberg had been CEO at La Quinta for about 15 years.
In a second announcement the same afternoon, La Quinta provided modestly lower guidance (than previous) for RevPAR (revenue per available room) and for full year adjusted EBITDA. RevPAR guidance was lowered about 1.0% from an expected increase of 4.5% to 5.5% to the range of 3.5% to 4.5%.
The reaction in the share pricing of La Quinta on Thursday was immediate and severe. After closing at $18.97 per share Wednesday afternoon, the opening price Thursday morning was $15.93 per share, or some 16% lower than the day before. Based on about 131 million shares outstanding, the drop amounted to about $400 million in lost market capitalization.
Begin with the assumption that one of the primary purposes of closely held and family businesses is to create wealth for their owners. Despite this driving purpose, the owners and managers of many private businesses engage in strategies that actually destroy wealth for their owners.
Carrying excess cash on your balance sheet is not a good thing. Learn why in this post.
During this webinar sponsored by the American Society of Appraisers to be held Tuesday, February 24, 2015, Chris will walk through key portions of his new book, Unlocking Private Company Wealth, and talk about the implications for business owners while relating the content to business advisers. He will discuss not only ideas and concepts that will enhance the quality of conversations you have with business owners, but will provide real-life examples of these concepts in action. Learn more about it here.
Chris Mercer’s newest book, Unlocking Private Company Wealth, is announced in this post! Read all about the book here.
On Tuesday, November 18, 2014, Chris Mercer will conduct a 100-minute webinar on the topic of “Unlocking Private Company Wealth: A Tutorial for Business Advisers.” The webinar is being sponsored by Valuation Products and Services and begins at 12:00pm (Central). For more information on the content of the webinar, view the video from Chris. There is also a link to register.
