Business Continuity


What Are the Issues?

  • Are you ready to give up control and your power base?
  • Is there a prepared heir apparent?
  • Are there next generation issues?  (Some kids working in the business and others who are not.)  What is the solution?
  • What are the company capital constraints for creating partial liquidity?  Buying out partners?
  1. Myth:  My Company has an underlying and perpetual intrinsic value.              
  2. Reality:  Your Company has a point-in-time value.
  3. Conclusion: Synching optimal retirement timing and maximum sale price is the Holy Grail of succession planning.   
  4. Solution:  Comprehensive strategic planning and tactical implementation of the plan.

Snapshot of the Present?

  • Are you prepared to have your partner’s spouse as your new business partner and/or co-owner?
  • Is your shareholder agreement comprehensive and current?
  • Is the company exposed to the 50/50 ownership conundrum?
  • Are current Buy/Sell Agreements in place, reflect today’s realities and fully funded?

Exploring Solutions – Investment Banking/M&A

  • Preparing for a sale is crucial to determining success.
  • Has sell side due diligence been completed?
  • Maximizing value is a process which typically takes some time and effort.
  • Company value drives multiples.  Multiples do not drive valuation.
  • Strategic buyers and financial buyers have different objectives and corresponding, different implications for you and the company.
  • Managing the auction process to maximize values…even when you “know” who the buyer is going to be.
  • What are the pending tax issues?

ESOPs

  • Powerful alternative to an outright sale.
  • ESOPs can provide a better return than an outright sale.
  • Offer superior flexibility on multiple levels.
  • Sell all or sell a little.  Sell now or sell later.
  • Maintain control and begin to create liquidity.
  • Enhance company value. Companies with ESOPs perform better, as a rule, than non-ESOP companies. (1)
  • ESOP’s are more powerful and flexible than a 401(k) matching program(1) 
  • ESOPs are typically far simpler to put in place and far less expensive to execute than an outright sale.

(1) University of Iowa Law School, U.S. General Accounting Office, Reish & Luftman, National Center for Employee Ownership

(2) Menke & Associates, Inc., ESOPs versus

401(k) matching programs