Last week we introduced a concept that, to some of you, may be a new option. If you’re not ready to sell your business and ride into the sunset, imagine remaining in the industry you love. What if you could even remain in the business you’ve lovingly built into the successful firm it is today?—and reap the future benefits of being a partial shareholder into its future? Most owners assume they have to either sell—take the first bite out of the apple—or hang on and keep polishing that beautiful fruit.
Here’s what brokers and investment bankers mean by the “second bite of the apple.”
You love your company but don’t want to have so many of your assets tied up in the business. You want to extract that equity for legacy planning or to start new businesses. In addition, you love the industry you’re in and want to continue impacting the industry and your clients.
Determine your options: Do a self-assessment.
What are the factors that make our firm unique? (ABA has found 14 factors that need to be considered by all companies).
- How would we describe our culture? Would a potential investor understand that?
- How do we find the right investment and management partners?
Gaining clarity on your firm’s culture is simple but painful. Imagine this scene from the current movie, Martian: the hero, botanist Dr. Watney (Matt Damon), is forced to operate on himself after being punctured by an antenna and left for dead on Mars. You really need—and would rather have!—the perspective of a third party.
Once you’ve gotten clarity on your culture, you need to form YOUR right team. You need a trusted
- business advisor who can optimize your business,
- attorney, or
- a business broker…
…someone qualified to guide your firm through the necessary steps five to eight years before you plan to get outside investors/partners. The business advisor who helped you clarify your culture has the inside perspective to know what culture and skill set can take your firm to that “second bite.”
Once you’ve assembled your team, the real work begins. Many deals die at the closing table because the owner hasn’t done adequate planning to determine:
- Quality of Life™ result he wants after the partial sale (ABA can get you ready with our Legacy Roadmap process);
- The Options: asset or equity sale;
- Stewarding Your Assets.
As Kopitz says
[To sell your business] takes a lot of time, stress and energy…In our case it took a year. I was completely uninvolved in the business during that period of time.
–Steve Kopitz, CEO of Summit Sports
You’ve built a successful business by learning how to develop the people and systems to get you from having a great job to building a business that creates time and money for yourself. You are an expert at running your business, but you now need sages who can ensure your life and your business and your legacy continue to remain aligned through the “second bite” of the apple.
- What dynamics are you currently managing? Which will be addressed by future investors/partners?
- What’s your path and how do you prepare for it?
- If you want 2nd bite of apple, how do you find the right partners? Strategic vs. financial?
Image Source: Levitating Apples by Petr Kratochvil via PublicDomainPictures.net
Quote Source: http://www.wsj.com/article_email/the-missing-boom-in-small-business-sales-1444865868-lMyQjAxMTA1ODE1NTgxMzU4Wj?alg=y