As the baby boomer generation has reached retirement age a flurry of literature and advisory proposals suggest 70% of small businesses are not ready to sell. We agree a spending for a good assessment of the challenges and realities of an exit is one of the most important and valuable expenses an owner can incur. The current literature espouses what we call an exit committee that enumerates, evaluates and investigates the options for an owner. The premise of this process is that the owner selects upfront the team to IMPLEMENT an exit AND ENGAGES this group to develop a plan. This sounds conceptually attractive but seems to founder in practical matters. And upon inspection this advisory team is fraught with conflicts. Your accountant and legal counsel face loosing a valuable customer with a sale. Your insurance agent wants to place substantial keyman or buyout life insurance to cover the interim death risks. Your sell side investment banker wants to dress you for the dance and take you to market.
Tower believes the evaluation and assessment of an exit needs to be separated from the implementation of an exit. We advocate (Assess & Prepare) then Exit.
Assess: This step requires hard nosed understanding of the business sale process, what works and what fails, and how buyers behave when buying a business. It requires a full understanding of the financial exit options and what is achievable and what is not. It should address the weaknesses and issues that can be fixed prior to an exit and to what degree they are important. We have seen hundreds of companies go to market beleiving that profits are optional.
Prepare: This step is easy to describe and often hard to do: Fix any proifitability issues that potentially impair the ability to get a deal done at the value an owner desires. An owner who has run the business for the last 30 years, probably needs assistance to fix some of these issues; sometimes they just need them clearly placed on the table. We will bring to you the experience and tools to IMPROVE ypur business and get it ready to sell. We are prepared to work with you over the 6 -18 months( or longer) it takes to make a plan and get results.
Tower offers an EXIT PREP ASSESSMENT service and an EXIT CFO service to help owners understand where they stand, and then prepare before an exit. While these steps require a solid gasp of the actual Exit process, the tasks required to help an owner Assess and Prepare are very different.
When it is time to implement your acutal exit find and hire the right resource to do so. It may be an investment banking firm to run an auction. It may be your attorney to work you through an ESOP. It may be a sale to a family member. Tower will help you understand and evaluate the options.