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How do I get out of my Business?
So here is the universal truth: Few, if any 30-40 year-old family businesses were built to Sell. They were built to support a Lifestyle. And that’s a problem when the day rolls around where it’s time to sell.
If you want, or need to sell your business quickly, odds are you will end up selling it for a 30-40%, even a 50% discount to intrinsic value.
So ask yourself: How important is it to not take that discount? How important is it to add back 40% to the value of your business as you sell it?
So the first thing you need to know is what you are probably worth. That is not an easy question though. At any given time, there are a number of completely valid “Values” for your business, depending upon who is asking, and what the application is. For context's sake, understand the Core principal for most business valuations is simply “Adjusted Earnings” times some “Multiple”.
The multiple is a number reflecting the risk of the earnings both being sustainable and in fact, growing.
So here is the issue: As the Owner, for years, you take a ton for granted! You probably are the greatest asset in the business. Your key employees and oldest, best customers as well as suppliers have a material relationship with you. A lot of things happen because of you. Many of those things you take for granted.
A Buyer, knowing you will be out of the picture after the sale, simply will not take these issues for granted. They represent “Risk” to the continuation, let alone growth, of earnings. Thus they apply a lower “Multiple” than you feel is appropriate. This is the “Gap” between Owner Value World and Buyer Value World.
So you can hire a Business Broker, and M&A firm working in the Lower middle market space to find a Buyer today. Or you can work on staging the business for a greater valuation. It’s about time versus value.
Let’s talk about time. Staging a business to maximize sales is a 6 to 12, even 18-month process. The question remains: How important is it to get your true value out of the business, or will you leave it for the new Buyer to gain from your need to move quickly.
We can help you better understand where you are and where the low-hanging fruit lies in making the greatest impact on valuation.
It all starts by taking the SURVEY and reading the book… But remember, Time really is Money.
The 7 Pillars of Value Creation™ works alongside our Exit Valuation Survey. From the survey algorithms, we see your business' Multiple, and your score in each of the 7 components. This is what to expect a Buyer will see after performing their own due diligence, and how they will value your business (you still need to have your EBITDA determined, which we can help you with).
TIME VS VALUE
They say in life, you either pay with time or money and that has never been more true than when you are selling your business.
If you want to sell your business quickly, as it is now, you'll be selling for an average of 30-50% less than it's true value.
Let us let you in on a little secret. If you sell your business now and waste that extra value - it doesn't disappear. The buyer will profit instead. The buyer will profit from your life's work. They will take the simple steps needed to increase the value. In less than a year, they will profit from what has taken you 30 odd years to build.
So you have a problem right now. Your retirement has a problem. Frankly, most family businesses do. The typical family business sells for 40%+ less than its intrinsic value.
This is why private equity groups are always looking to aggregate businesses in a specific silo, release the Multiples, create synergies that do not exist today, and then sell for significantly more than they bought them for. Unfortunately, if you don’t do something now, you will follow the same path as countless others. Selling your business for a fraction of the value and contributing to someone else’s retirement, instead of your own.
You shouldn’t even consider selling until you have gone through the steps to maximise the value. This can take up to 12 months. But the question you should ask yourself is if you can really afford not to take action?
So what can you do? Where do you start to solve the problem?
The 7 Pillars is our proprietary process focused on materially enhancing the current value of your family business as you get ready for the departing transaction.
Once you take our Exit Valuation survey, the algorithms within will score your business on the 7 key components that comprise a Multiple.
It will understand what they are, how you scored (which is the equivalent of how a Buyer will measure you), and where you should/could be in each of the 7 components, and thus you have the beginnings of a plan.
Trying to build value any other way is trying to get out of a maze, blindfolded. It will not happen.
Learn how to actually improve on each of these components, driving to a higher multiple, let alone seeing EBITDA rise concurrently, and your business will command a significantly higher valuation than from where you began.
It all starts with the survey…
What We Do
The marketplace is in trouble. Your retirement is in trouble. You're now ready to sell your business but your business is not ready to be sold.
Our mission is to unlock the hundred billion dollars that are trapped inside America's family-owned businesses. Most family-owned businesses sell for 30-40% below their actual worth because owners don't know how to access the value - but we have the solution.
7 PILLARS
There are 7 Pillars of Value Creation within your business. We can help you improve them all.
SELLING A BUSINESS
Selling your life's work can be stressful. We help you prepare for a successful sale at your business' true value.
KEY TO SALE
The only way to sell your business is to change from a business built for lifestyle, to a business built for sale
FAMILY BUSINESS
Whether you are selling your family business, or transferring to a family member, we help you with a successful transition.
BUSINESS VALUATION
Learn your business' true value, not what you think it's worth. It's the first step from where you are now to where you need to be.
M&A ADVICE
Our experts can provide you M&A advice with a difference. We put you first, instead of trying to get the biggest fee.
How It Works
It's time to face the truth. If you don't plan your exit correctly, you could end up working until you die. Your journey to a successful sale and increasing the value of your business by 30-50% starts with taking our Exit Valuation Survey. This tells us exactly where you are now, the exact performance of your business, and what you need to do to improve. You can access your buyer Risk Report and speak to our analyst team on a complimentary call to discuss your results, increasing value and exit options.
TAKE THE SURVEY
Discover how your business scores in
the 7 key drivers of valuation
ACCESS RESULTS & ANALYST
Understand the risks a buyer sees
when valuing your specific business
INCREASE BUSINESS VALUE
Implement the "7 Pillars Of Value Creation" and increase your business value
© 2024 ETFB. All Rights Reserved
*The Lower Middle Market is comprised of businesses worth $5-$30 million, typically having EBITDA of $1 million - $4 million.
The 7 Pillars of Value Creation is our name for our work as Business brokerage services and related consulting pertaining to business sales, mergers, acquisitions and business valuation. Exit The Family Business the downloadable guide and any accompanying assets or affiliates are provided for informational and educational purposes only. It is not intended to provide tax, accounting or legal advice, nor is it an offer or solicitation to buy or sell, an endorsement or sponsorship of any company, security or fund. Certain owners, officers or affiliates may be associated with investment firms and may make referrals from time to time for such services, but this does not constitute investment advice, nor should it be construed as Exit The Family Business being in that business. We always suggest you seek professional advice. Past results are not a guarantee of future results.