You should make every effort to prepare or ‘groom’ your business so it is sold successfully at the first opportunity. While the financial advisors you appoint will work with you to address issues specific to your company, there are a number of general grooming points worth considering (even before you appoint advisors) to maximize the value of your business:

Sales & Profitability: Historically, you may have been setting your prices, and thus your profit margins, at levels designed to create barriers to entry for your competition. If you are planning for a business sale your focus is likely to be short term strategies. It will be time to re-examine your market and customer base to see if higher sales and turnover levels are achievable. If the proposed sale itself is a number of years away, you should consider performing a strategic review of the entire business.

Operating Costs: You should regularly review your operating expenses but this is especially so when preparing your business for sale. You need to identify avenues to reduce expenses without affecting the operational effectiveness of your business.

Profit Trends: Apart from current margins, a purchaser will be looking at profit trends. Buyers are looking to see stable and steady yearly profit trends. Therefore, risky projects should be avoided and longer-term contracts that may prove to be onerous should be fully considered before acceptance. Unprofitable contracts need to be reevaluated and, if appropriate, terminated, as it is quite possible they will be detrimental to the value of your business.

Management Team: The purchaser of your business will be looking to acquire a high caliber management team. It may be worth reviewing your corporate structure to ensure that job titles and role descriptions adequately reflect the contribution that your management team makes to your business. Any re-structure needs finalization well in advance of an anticipated sale. A purchaser may also want assurance that the management team is supportive of your decision to sell or at least that it is likely to stay with the business for a reasonable period post-transaction. You should consider talking to management - how cooperative will they be? You never know, they may be interested in buying the business themselves.

Asset Base: Are there any assets in the business that may be of little or no interest to potential purchasers- e.g. short-term investments, under-utilized property, equipment or perhaps surplus cash? Think about realizing and removing them from the business before the sale. It is also worthwhile having all your property assets valued individually.

Restructuring: If your business has more than one division, some thought should be given to restructuring it into a number of stand-alone entities and perhaps selling these separately. Any such reorganization will have potential tax implications and other complexities associated with it and it will be important to take professional advice before undertaking any such initiative.

Tax Planning: Details of the various tax factors that you need to consider are set out in section 4 of this guide. Initial points to address include making sure that all your Corporation Tax, PAYE and VAT returns and payments are up to date. In addition, any tax losses that your company may have built up over the years may now have a value to the extent that they are available for use by the potential purchaser. Personal tax planning opportunities should be discussed with your tax adviser.

Valuation Expectations: You must have realistic valuation expectations. Valuation is important but do not let it get in the way of securing the sale.
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Timing: Deciding the best time to sell your business can be a difficult decision to make. Factors to be considered when making this decision include the level of corporate activity in your industry; the state of the economy; changes in sector relevant legislation; and available tax reliefs (e.g. do you have to be a certain age to avail of certain retirement reliefs or pension planning opportunities).

What is a “Typical Situation” people are in when they realize they need your help?
They are not happy with the performance of their business and need help in growing it, cutting costs, determining a solid strategy, and/or working on developing and implementing proper procedures.

What is something someone might say that would lead me to think of you? 
I need some help, I’m losing business, I’m losing key employees, or I’m just not happy with the performance of my company.

What (Specifically) do you do?
I help companies develop a solid business strategy.  My firm helps companies create and execute solid policies and procedures.  We help effect needed change within an organization.

How do you do it? 
My firm will generate a diagnostic of the business and determine what’s working and what needs to change or be improved.  We will create a strategic plan for the business that is easy to understand.  We then will help the company execute that plan, and we will provide real-time adjustments and positive feedback and direction on a daily basis. 
Our plan is to be able to help companies learn what they need to do to become better, get them to that point, and then give them the tools so that they con continue improving on their own.  If needed, we also lend money to companies if they need working capital to make changes and improvements.

Matching Ideas with Resources: 

What the business may need to do

• Productize- What are you best at?
• Positive Cash Flow
• Hire Sales Team
• Stop Selling Everything Else
• Long Term Plan for Managers
• Find a Business Broker
• Tell the Team
• Convert Offer to Deal

What I may need to Do
1) Work to Recast the Financials (need 2-3 years Financials)

• Develop a Valuation

2) Write 3-year Business Plan

• Long Tern Vision
• RE-discover Strengths
• Re- Develop Customer Acquisition Strategies
• Get the Business to the Point where
• Profits are up,
• Business Runs more efficient
• Overhead is Down

3) Develop all information in a “Book” (Valuation) of the Business
4) Develop a list of Potential Buyers

• Strategic and Financial

5) Field Offers
6) Close

Typical Situation: Our client is thinking of selling the business. Maybe they are going through a divorce or IRS situation. GLM Can do a business Valuation for the purposes of determining a sale price or as a gauge of business growth. GLM cannot do a formal Valuation for the purposes of law and IRS.
 
When you hear a business owner say:
·         “I am looking to sell my business”
·         “I am looking to make a strategic acquisition”
·         “I am looking to grow my business and need help in raising capital”
·         “I need to get my business valued”
·         “I am looking to gift shares of my business and need a valuation”
 
Valuation Service Firms provide business valuations, estate/gift valuations and value everything outside of real estate and hard assets. They can also help business owners to sell their business or with raising capital.
 
How they Work They will ask questions about the ownership structure, how the business operates will look at the financial statements and forward looking projections.
 
Matching Ideas with Resources:

Typical Situation: Our client is talking about their partnership and succession planning. Maybe another business owner they know died or became disabled and their company is floundering because of it. They are trying to figure out how to figure out how to disperse an estate equitably when not all the children are involved in the business. Their company has grown since they originally drafted their buy sell agreement and want a review.
 
When you hear a business owner say:
·         “My taxes are too high.”
·         “I would hate to have to deal with my business partner’s spouse. (What happens if my partner dies or becomes disabled?)”
·         “What’s stopping my key employee from starting a business across the street?”
 
An Insurance Benefits Advisor protects business owners, their families and their businesses from the financial catastrophe that death or disability can cause. Whether it happens to a business partner, a key employee or themselves I make sure the financial impact is as minimal as possible.
 
How they Work First, they will do a deep dig to find out what the concerns are and other possible trouble points. Next, they educate on the possible solutions. Then once the client has the information needed to make a decision they implement the solution from one of our many carriers. They provide peace of mind and tax-savings ideas to business owners and successful individuals through qualified plans, life, annuities, disability, health, Medicare and long term care insurance.
 
Matching Ideas with Resources:

​Family (Personal) Challenges
 
Emotions and inability to separate business and family. Family problems and dynamics will affect the business. Divorce, separations, health or financial problems also create difficult political situations for the family members.  Emotions can interfere with business decisions, and trying to make one another happy constantly is unrealistic.
 
Tunnel vision. Lack of outside opinions and diversity on how to operate the business.  No-one, like a business coach, to ask the tough questions.
 
Role confusion. Roles and responsibilities (for active and passive family members) must be clearly defined. Absence of clear written policies and business norms for family members.  Going from family character to business professionalism can create confusion.
 
Paternalistic and Overly Conservative. Control is centralized and influenced by tradition instead of good management practices.  Older family members try to preserve the status quo and resist change. Especially resistance to ideas and change proposed by the younger generation.
 
Communication problems. Usually provoked by role confusion, emotions (envy, fear, anger), political divisions or other relationship problems create barriers to effective communication.
 
Retirement and estate planning. Long term planning to cover the necessities and realities of older members when they leave the company.

When you own a family business, there are two types of challenges you have to deal with; Business Challenges and Family Issues. We will talk about both, this week starting with Business Issues.

Business Challenges
 
Lack of written strategy. No documented business plan or long term planning. Decisions are made day-to-day in response to problems. No long-term or strategic planning.
 
Control of operations and compensation problems for family members. Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified.  Lack of participation in the day-to-day work and supervision required. Which family members are shareholders vs. daily management.  Difficulty controlling non-participating members of the family.
 
Vision, Growth and Expansion. Each family member has a different vision of the business and different goals. Problems due to lack of capital and new investment or resistance to re-investment in the business.  What measures must be taken to grow locally, nationally, and internationally.
 
Succession Planning. Most family organizations do not have a plan for handing the power to the next generation, leading to great political conflicts and divisions.  Problems when the next generation is not adequately prepared for take-over.  There are some specific issues related to the third generation.
 
Business Valuation and Exit strategy. No knowledge of the worth of the business, and the factors that make it valuable or decrease its value.  No clear plan on how to sell, close or walk away from the business.
 
Lack of talent and Training. Hiring family members who are not qualified or lack the skills and abilities for the organization. Inability to fire them when it is clear they are not working out.   There should be a specific training program when you integrate family members into the company. This should provide specific information related to the goals, expectations and obligations of the position.
 
High turnover of non-family members. Happens when employees feel that the family “mafia” will always advance over outsiders and when employees realize that management is incompetent.

Typical Situation: Our client’s business is profitable and the owners are starting to think of saving extra dollars for retirement. Maybe the Business has a retirement plan that needs to be fixed.
 
When you hear a business owner say:
·         “I have a 401(k) plan and don’t understand it.”
·         “Now that business is good, I would like to start saving for retirement and receive a tax break while doing it!”
·         “I received a letter from the IRS/DOL saying they want to review my qualified plan.  I need help!”
·         “I have a question about my company retirement plan and don’t know who to call.”
 
Retirement Services provide third party administrative services to qualified retirement plans that are sponsored by businesses.  They design, implement, administer, and when needed, terminate the plan.  They are qualified to work with the Internal Revenue Service, Department of Labor, and Pension Benefit Guaranty Corporation to fix compliance problems. 
 
How they Work When They complete the annual administration, they will also consider suggested improvements.  They review the plan as demographics or pension laws change.  They work with the plan sponsor to keep the plan in compliance with current pension laws.
 
Matching Ideas with Resources: