Business Exit Planning Options, Value Enhancement, and Transaction Management for Business Owners

by Nemethy, Les

• ISBN13: 9780470905319
• ISBN10: 047090531X
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-03-22
• Publisher: Wiley

Summary

The most viable exit strategies for owners of mid-sized companiesFor many business owners, cashing out of a business is a lifelong dream. For some, exiting a business can be a nightmare. Business Exit Planning: Options, Value Enhancement, and Transaction Management for Business Owners provides a comprehensive view of what every business owner needs to know to plan and execute a business exit. The book Includes 30 relevant mini-case studies on business exit planning and transaction management, as well as a glossary of frequently used technical terms Details options for those owners who no longer want to be active in the business, as well as for those who want to remain invested Covers a wide range of topics related to business exit planning and transaction management, including IPO, MBO, refinancing, ESOPs, building an exit team, business plan and valuation, due diligence, and estate planningRegardless of whether a business owner seeks an immediate exit or a staged exit over time, Business Exit Planning provides a comprehensive strategy and road map to define exit-related objectives.

Author Biography

Les Nemethy is the founder and CEO of Euro-Phoenix Financial Advisors Ltd, a leading corporate finance house in Central Europe and emerging markets specializing in helping owners of mid-sized enterprises sell their companies. Over the past twenty-five years, he has been involved in the sale of hundreds of businesses in more than forty countries. He speaks and writes frequently on the topic and his syndicated column appears in more than ten publications around the world.

Table of Contents

Preface	p. xi
Acknowledgments	p. xv
Disclaimer	p. xvii
Foreword	p. xix
Introduction: The Challenge of Exiting Your Business	p. 1
Three Overarching Themes	p. 6
A Few Words of Advice	p. 9
Business Exit Planning	p. 11
An introduction to Business Exit Planning	p. 13
Ways to Exit Your Business	p. 14
What is Business Exit Planning?	p. 15
Evidence on Why Business Exit Planning is Necessary	p. 16
Understand Your Motives	p. 17
The Special Case of Retirement	p. 20
Begin with the Endgame in Sight	p. 23
Develop a Game Plan	p. 24
Value Systems and Visualizing the Endgame	p. 25
Exit Options	p. 29
Intergenerational Transfer	p. 29
Initial Public Offering	p. 32
Merger	p. 35
Hiring Professional Management	p. 36
Management Buyout	p. 37
Refinancing	p. 38
Employee Stock Ownership Plan	p. 39
Liquidation	p. 39
Choosing the Right Exit Option	p. 39
Building Your Team to Assist Your Exit	p. 43
Reasons for Building a Team	p. 43
Composition and Role of Your Team	p. 45
Selecting Advisors: An Overview	p. 53
Your Advisors' Ethical Standards	p. 55
Building a Business with Sustainable Value	p. 57
Look at Your Business from an Investor's Perspective	p. 58
Clarifying and Adjusting Corporate Strategy	p. 59
Corporate Governance, Systems, and the One-Man Show	p. 61
Pre-Transaction Restructuring	p. 68
Identify and Manage Risks	p. 72
Operational Improvements to the Business	p. 78
Non-Arm's-Length Situations	p. 82
Business Plan and Valuation	p. 85
Reasons for Making a Business Plan	p. 85
Should You Perform a Valuation of Your Business?	p. 87
Recasting Financial Statements	p. 88
Building a Business Plan	p. 90
Introductory Comments on Valuation	p. 91
Types of Valuation	p. 93
Adjustments to Valuations	p. 96
Tax Planning, Estate Planning, and Insurance	p. 101
Tax Planning	p. 101
Estate Planning	p. 102
Use of Insurance in Your Exit Strategy	p. 105
Finalizing Your Exit Strategy	p. 107
What Type of Investors Should Be Targeted?	p. 108
Should There Be a Listing or Asking Price?	p. 110
Should There Be a Competitive Process?	p. 110
Why Use a Competitive Process in Selling a Business?	p. 112
What Are the Possible Drawbacks of a Competitive Process?	p. 114
Timing Your Exit	p. 115
Communicating with Other Shareholders	p. 116
Your Contingency Plan	p. 117
Business Exit Planning Report	p. 117
Managing the Transaction	p. 119
The Transaction Process	p. 121
Overview of a Competitive Process	p. 122
Confidentiality through a Transaction Process	p. 124
Involving Company Staff in the Transaction Process and Communications with Investors	p. 129
Marketing Your Opportunity: From Long List to Short List	p. 131
The Information Memorandum	p. 132
Nonbinding Offers	p. 135
Due Diligence	p. 135
Binding Offers	p. 141
Exclusivity	p. 141
Transaction Structuring	p. 142
Head of Agreement	p. 145
Sale and Purchase Agreement	p. 146
Closing the Transaction	p. 151
Noncompetitive Processes	p. 151
Negotiating a Transaction	p. 153
Get to Know Your Negotiating Partner	p. 154
Let Your Negotiating Partner Make the First Offer	p. 155
Concede in Small Increments	p. 155
After Asking a Crucial Question, Hold Your Tongue	p. 155
Every Term of the Deal Also Depends on Every Other Term	p. 156
Be Prepared to Walk Away from the Deal	p. 157
Know Your Best Alternative	p. 157
Cross-border Transections	p. 159
Why Don't More People Market Their Companies Internationally?	p. 160
The Challenges of Cross Cultural Negotiations	p. 162
Conclusion: The Only Question with Wealth Is, What Do You Do with It?	p. 165
Revisiting the Three Overarching Themes	p. 165
You Have Raised Your Cash. What Next?	p. 167
The Macroeconomic Effects of Succession Failure	p. 170
Notes	p. 173
Glossary	p. 175
References	p. 179
About the Author	p. 181
Index	p. 183
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