Business transition planning 2015
-
Upload
ecosil-technologies-llc -
Category
Business
-
view
143 -
download
1
Transcript of Business transition planning 2015
Your Business: Legacy or Liability?
Maximize return and limit risk when you sell a business
Using Business Transition Planning
Plans Are Useless, but Planning?
“In preparing for battle, I have always found that
plans are useless but planning is indispensable.”
Dwight D. Eisenhower
Reality: Owners Don’t
Plan for Transition!
• Denial of your mortality
• Fear of an undefined future
• Fear of losing identity
• Think it’s too early to plan
• Fear the process is complicated/expensive
Debilitating illness or death
Divorce
Inheritance by family – management and/ or ownership
Sale of business to a third party
Transfer to a business partner
Sale to the company management team
Business Merger
Just shutting down!
Types of Transitions
Elements of Successful
Business Transition
1. Determine Your Required Net Proceeds
2. Get A Realistic Valuation And Cost Estimate
3. Business Improvements to Close the Gap
4. Plan to Minimize Taxes and Fees
5. Develop a Formal Transition Plan
80% have over 50% of their wealth in their business
70% do not have a business succession plan
Over 60% do not know the true value of their business
Reality: The Facts About Business Owners
Planning To Sell?
5 million businesses
Will go up for
sale in the next
5 years
Only 1 in 4 of
businesses for
sale are sold
41% of Owners Plan For Their Kids To Take over the Business, But …
Only 30% of inherited
businesses survive into
the second generation
Planning for Inheritance?
And only 12% into the 3rd generation!
Another FACT
The value of executinga successful transition planhas been determined toSUBSTANTIALLY exceed$1000 per hour for thetime spent by the owner.
Assess Plan Execute
Getting It Done In 6 Months
Phase III
45-60 Days
• Inventory
competencies
• Individual
development
• Accountability
• Measure
Phase II
45-60 Days
• Future Goals
• Gap Analysis
• Performance
management
• Action Plan
Phase I
30-60 Days
• Owner
Commitment
• Establish Team
• Baseline
Assessment
Business Owner
BusinessLawyer
Accountant
Business Broker
Financial Planner
Business
Advisor
Transition Coach
Family
Estate & Tax
Planning
Building A Transition Team
0 2 4 6 8
<$499K
$500K - $1 M
$1M - $2M
$2M- $5M
$5M - $50M
2.6
2.9
4.3
4.5
5.4
Average EBITA Multiple
EBITA Multiple for SCORE >80
Calculating Value Based on EBITAIncreasing “Sellability”
Source: “Built To Sell”, 2012
Transition Planning Guidelines
• Create a Positive Vision of the Future
• Define roles and responsibilities
and put them in writing
• Keep everyone in the loop throughout
the process
• Seek external advice from consultants to
resolve issues objectively
• Communicate a clear action plan to
all stakeholders
Business risk exposure – economy, industry, individual
Business “resilience” and stability
Business performance
Availability of financing
Maximizing net value – taxes, fees, assets
Ownership structure
Key Transition Valuation Issues
To obtain a more extensive slide presentation, aplanning worksheet, or to discuss your plan
contact me atArt@Ohio BusinessHelp.com
(937)985-0481
OrganizationsInternational Business Brokers Association www.ibba.orgInternational Succession Planning Association:
http://www.ispassociation.org/Family Business Institute: www.familybusinessintit.reachlocal.com
Publications:Built to Sell http://www.thesellabilityscore.com/The Family Business Crisis, by Wayne Vanwyk
“www.thebusinesstransitioncrisis.comFamily Business Succession: The Final Test of Greatness
McClure, Stephen LEvery Family’s Business, 12 common sense questions
by Thomas Dean. www.everyfamiliesbusiness.comNOLO Guide to Selling A Business by Fred Steingold www.nolo.com
Additional Resources