Welcome to The Exit Check List: 5 Steps to a Happy (and ...

Welcome to The Exit Check List: 5 Steps to a Happy (and Lucrative) Exit From Your Business

Presented by: Gelman, Rosenberg & Freedman CPAs and ENNIS Legacy Partners

Please note: Use the “Question” panel to speak with the administrator if you experience any technical issues while

logging into GoToWebinar. For the best audio quality, please call-in by phone vs. connecting via your computer.

Call: +1 (914) 614-3221 | Access code/event number: 598-127-974

GELMAN, ROSENBERG

& FREEDMAN Certified Public Accountantswww.grfcpa.com

www.ennislp.com | 2

HousekeepingGeneral Information/Technical Questions

We strongly recommend that you connect by phone instead of your computer for the best

audio quality. Call +1 (914) 614-3221. The event number is 598-127-974.

Please use the “Question” panel for any technical questions, or you may contact Dominic

Acosta at [email protected].

This presentation will be recorded and made available to download at

www.grfcpa.com/webinars.

mailto:[email protected]

http://www.grfcpa.com/webinars/

GELMAN, ROSENBERG


www.ennislp.com |

• Important: Three (3) CPE words will be provided during the presentation. Please write them down

– we will not provide them again via GoToWebinar or email (no exceptions).

• Please complete the electronic survey that will appear automatically at the end of the webinar.

Turn off your pop-up blocker (leaving it on could block the survey).

• Attendees seeking CPE for this presentation must complete the survey and enter all three CPE

words. You cannot claim CPE unless we receive a completed evaluation with the correct words.

• Technical questions about the survey can be addressed to Dominic Acosta at [email protected].

3

HousekeepingCPE Credit


GELMAN, ROSENBERG


www.ennislp.com | 4

Webinar Objectives

Learning ObjectiveTo understand the steps business owners should take now before deciding to

sell or transfer a business

Instructional Delivery MethodsGroup Internet-based

Recommended CPE1.0 CPE Credit

Recommended Fields of StudySpecialized Knowledge

PrerequisitesNone required

Advance PreparationNone

Program LevelBasic

Course Registration RequirementsNone

Refund PolicyNo fee is required to participate in this session.

Cancellation PolicyIn the event that the presentation is cancelled or rescheduled, participants will

be contacted immediately with details.

Complaint Resolution PolicyGelman, Rosenberg & Freedman CPAs is committed to our seminar participants’ 100% satisfaction and will make every reasonable effort to resolve complaints as

quickly as possible. Please contact [email protected] with any concerns.

DisclaimerThis webinar is not intended as, and should not be taken as, financial, tax, accounting, legal, consulting or any other type of advice. Readers and users of this

webinar information are advised not to act upon this information without seeking the service of a professional accountant.

Housekeeping


The Exit Check List

5 Steps to a Happy (and Lucrative) Exit from Your Business

Co-hosted by

Walter H. Deyhle, CPA/ABV/CFF, MAFF, CExP™, CEPA

Senior Tax Partner and Director of Valuation and Exit Planning Division

Gelman, Rosenberg & Freedman CPAs

Pat Ennis, CExP®, CAP®, CFP®

Founder & President

ENNIS Legacy Partners

Patrick Crosby

Senior Tax Accountant


Presenters Moderator

GELMAN, ROSENBERG


www.ennislp.com |




Our Team

6

Meet Your Instructors


Founder & President

ENNIS Legacy Partners

Poll Question #1

How many years until you are ready Exit?

A) 1 – 3 years

B) 3 – 5 years

C) 5+ years

GELMAN, ROSENBERG


www.ennislp.com |

1. Is your business ready to sell?

Value Builder will tell you

2. Are you personally ready to exit?

The Five Step Exit Check List will let you know

Two Questions Before You Exit Your Business

8

The Value Builder System™ The Exit Check List

Step 1Get Clear on Why You Are Exiting

GELMAN, ROSENBERG


www.ennislp.com |

Get Clear on Why You Are Exiting

10

Push

Pull

GELMAN, ROSENBERG


www.ennislp.com |

There May be Factors Pushing You to Exit

11

Push

Pull

STRESS

MARKET HAS PEAKED

NEED TO DIVERSIFY

RETIRE

BORED

HEALTH

GELMAN, ROSENBERG


www.ennislp.com |

But the Happiest Sellers Have Something Pulling Them Too

12

Push

Pull

START A FOUNDATION

NEW BUSINESS

GET FITTRAVEL

Make A List of What You Are Excited to Go Do

Poll Question #2

When was your business last valued?

A) Within the last 5 years

B) More than 5 years

C) Never

Step 2Align Your Exit Type With Your Why

GELMAN, ROSENBERG


www.ennislp.com |

Exit Options

16

$

Sell outright Re-capitalization Liquidate COO/CEO

Chairman Transfer to kids Management buy-out

GELMAN, ROSENBERG


www.ennislp.com |

Align Your Reason to Sell With Your Exit Options

17

Retire Sell to Strategic, Transfer to Kids

Market has peaked Sell to Strategic

Risk Aversion Re-Capitalization

Bored Liquidate

Something else you want to do COO/CEO

Chairman

Sell to Strategic

Liquidate

Health Liquidate

Sell to Strategic

Transfer to Kids

Management Buy-Out

Step 3Figure Out Your Number

GELMAN, ROSENBERG


www.ennislp.com |

Three Ways to Come up With Your Number

19

What it is worth VERSUSWhat you need or

What you want

GELMAN, ROSENBERG


www.ennislp.com |

Figure Out Your Number

20

Retirement

Income you need to fund your lifestyle $100,000

x25

Your nut $2,500,000

Investments outside your business - $700,000

Net proceeds needed from business sale $1,800,000

GELMAN, ROSENBERG


www.ennislp.com |


21

Risk Aversion

BE

FO

RE

Maximum position on % terms after re-cap 30%

Net Worth $5,000,000

Business Value $3,500,000

Current Position 70%

-30% $1,500,000

-$1,500,000 ÷ $3,500,000 42%

Therefore sell 58% @ a valuation of $3,500,000: $2,030,000A

FT

ER Net Worth $5,000,000

Business Value $1,500,000

Assets Outside $3,500,000

GELMAN, ROSENBERG


www.ennislp.com |


22

Bored or Something Else

Number of years running company 7

Market rate compensation $200,000

Your annual benefits – Salary and Perks $120,000

Your Investment of Time $80,000

x 7

Total Value of Time Invested $560,000

GELMAN, ROSENBERG


www.ennislp.com |

Calculate New Process of Sales

23

Sales Price $3,500,000

Intermediary Fee (10% of 1st Million 8% on 2nd Million 6% on 3rd Million) $260,000

Legal Fees (2-4%) $80,000

Employee “Thank Yous” $350,000

Net Proceeds Before Tax $2,810,000

Tax @ 30% $843,000

Net Proceeds After Tax $1,967,000

GELMAN, ROSENBERG


www.ennislp.com |

Consider Currency

24

VS.

Cash 90% Stock 65%

Stock10%

Cash35%

GELMAN, ROSENBERG


www.ennislp.com |

Six Things Every Employee (You) Should Negotiate

25

Job Description

Salary and Short Term

Bonus

Long Term Incentive –

Options?

SeverenceTerms

Holiday Acquirer Get Acquired

Step 4Decide the Life You Want Post Exit

GELMAN, ROSENBERG


www.ennislp.com |

Your Role Post Sale

27

Lender

Cash Vendor Take Back

$5,000,000 VS. Down stroke: $4,000,000

8% Interest on $1,000,000 x 5 Years: $1,216,560

Total Proceeds: $5,216,560

GELMAN, ROSENBERG


www.ennislp.com |

Your Role Post Sale

28

Earn Out

Cash Earn Out

$5,000,000 VS. Down stroke: $3,000,000

Earn Out: $6,000,000

Total Proceeds: $9,000,000

GELMAN, ROSENBERG


www.ennislp.com |

Your Role Post Sale

29

Consultant

Cash Consulting Agreement

$5,000,000 VS. Down stroke: $4,800,000

Consulting Fee: $500,000

$5,300,000

GELMAN, ROSENBERG


www.ennislp.com |

Your Role Post Sale

30

Shareholder

Cash Re-Capitalization

$5,000,000 VS. Down stroke: $3,000,000

Second Bite: $7,000,000

$10,000,000

Step 5Pinpoint Your Spot on the Exit Matrix

GELMAN, ROSENBERG


www.ennislp.com |

The Exit Matrix

32

Ma

xim

ize

cash

pro

ceed

s o

f sa

le

Willingness to stay on during transition

Liquidate Assets(Fire Sale)

Sell to Strategic Buyer

Re-capitalization

Management Buy-Out

Transfer to Kids

Chairman CEO/COO

Poll Question #3

What Exit strategy are you leaning toward?

A) Sale to 3rd party

B) Transfer to insiders

C) Transfer to family

GELMAN, ROSENBERG


www.ennislp.com |

5 Steps to Get Ready to Exit

34

1. Get clear on why you are exiting

2. Align your exit type with your why

3. Figure out your number

4. Decide the life you want post exit

5. Pin-point your spot on the exit matrix

Questions

4550 Montgomery Avenue, Suite 650N

Bethesda, MD 20814

(301) 951-9090 | www.grfcpa.com

9711 Washingtonian Blvd, Suite 550

Gaithersburg, MD 20878

(301) 859-0860 | www.ennislp.com


Founder & President

[email protected]



[email protected]



Join us again

5-Part GovCon Webinar Series

April 2 | Part 4: Understanding the Impact of FAR Part 31.2 Cost Principals on Indirect Rates

April 23 | Part 5: Understanding the Cost Accounting Standards (CAS)

More information and registration at www.grfcpa.com/resources/webinars.

http://www.grfcpa.com/resources/webinars

DisclaimerThis webinar is not intended as, and should not be taken as, financial, tax, accounting, legal, consulting or any other type of advice.

While we use reasonable efforts to furnish accurate and up-to-date information, we do not warrant that any information contained

in or made available in this webinar is accurate, complete, reliable, current or error-free. We assume no liability or responsibility

for any errors or omissions in the content of this webinar.

The use of the information provided in this webinar does not establish any contractual or other form of client engagement between

Gelman, Rosenberg & Freedman P.C., ENNIS Legacy Partners and the reader or user. Any U.S. federal tax advice contained in this

webinar is not intended to be used for the purpose of avoiding penalties under U.S. federal tax law. Readers and users of this

webinar information are advised not to act upon this information without seeking the service of a professional accountant.

Welcome to The Exit Check List: 5 Steps to a Happy (and ...

Documents

Transcript of Welcome to The Exit Check List: 5 Steps to a Happy (and ...