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| EXIT PLANNING The baby boomer retirement tidal wave is just ahead of us. No one is quite sure of its impact. Logically we may have more sellers than buyers making the sale of your business more challenging. So, planning for the ultimate transition in ownership and control of your business is more important that ever. Exchange long days and years without rest for long vacations while your business continues to run profitably. Exchange uncertainty in your financial security for clarity and confidence. Exhange weakness for strength in the final negotiations for the sale of your business. Value Proposition: This is not a simple process nor one that can be accomplished is a short time frame. Do not put it off to the last minute. Failure to plan may result in disaster. Implementation of the plan will not only improve current operations and anxiety, but it will create liquidity in a very illiquid asset. HBEkc will guide you through the complex legal, financial and collaborative process of developing a plan, of building a team of trusted and skilled advisors, of addressing tax and estate planning issues, and, most importantly, of building financial security. Why plan? Timing. With a plan we can take control of retirement on our timetable and direct matters where we have less control (i.e. illness, burnout, divorce and death). Money. With a plan we can have a better chance of achieving our financial objectives.
Why plan now? Goal setting, valuation, value building, marketing/negotiation/documentation and transitioning [done well] take 3 to 5 years. The Tsunami retirement wave of the baby boomer generation will have a significant impact, especially for those who do not plan for: Increased supply of sellers without a corresponding increase in demand of buyers. Retirement of baby boomer employees that are keys to the value of the business. Increased demand for capital needed for purchase.
Exit planning does not mean the Business Owner intends to leave the business in the near future.
It does entail: Establishing goals regarding possible timing for exit, projecting the current after-tax value of the business, adding it to the value of other income producing assets and projecting retirement income. Comparing the projected retirement income to desired income. Developing and implementing a plan to close the gap if there is a shortfall. Anticipating all possibilities of exit and developing contingency plans to preserve value.
Factors influencing outcomes that can be managed with a plan and that can be catastrophic without a plan. Economy Industry Technology Labor Capital availability Owner, leader and manager skill sets of internal buyer [i.e. family member(s) or key employee(s)] Conflicts in Value Systems: Family owned and operated businesses - Family values (emotional and supportive…rewards based on relationship
- Management values (rational, analytical and pragmatic…rewards based on performance)
- Shareholder values (visionary…rewards based on wealth creation, balance of risk and returns and liquidity)
Earnings (?Net Income/EBITDA/Adjusted EBITDA/NCFE?) Predictable - Sustainable
- Growing
Risk - Customers
- Suppliers
- Employees
- Operations
- Insurable/uninsured/uninsurable
- Financial statements
Internal versus External sale Pre-Sale Marketing Transaction Structure Asset sale - Stock sale
- Terms and conditions
Hold harmless clauses Representations and warranties Restrictive covenants Heartland Business Exchange, LLC 12949 Granada Lane
Leawood, KS 66209
Telephone: 913-681-9162
Cell Phone: 913-579-6270
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