High Points News And Information

Failure to Plan Has a Price

“Exiting” is not black and white: Stay involved in the business and have a liquidity event to develop the cash you need.
Transition Planning guides you to orchestrate a successful, permanent exit or to forge a path toward an exit without giving up ownership. Or both.

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Knowing Business Value is a Very Good Place to Start

People don’t want to spend money on things they don’t need. So why would you need an estimate of your company’s value if you don’t expect to leave for several or many years? You may not if you fall into one of two groups:Owners who are sure that their business exits are more than 10 years away.Owners who are certain that the value of their companies is miniscule compared to what they will need upon sale or transfer.However, many owners look to the value of their businesses as the chief source of liquidity for their post-exit lives. Owners intend to leave as soon as is feasible rather than when they are completely burned-out. Therefore, most owners need to know the value of their companies now so they can be smart about creating greater business value as quickly as possible.Knowing the value of your business today is critical, whether you plan to leave your business tomorrow or in five years, for the following five reasons: An estimate of value establishes the starting line and distance to the finish.An estimate of value tells owners where their unique race to their exits begins. The owner’s job, whether the company is worth $500,000 or […]

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The Lifetime Stay Bonus

You’ve decided to sell your company to an outside party. For a number of reasons, it is critical to keep your employees on board as you leave.Key employees’ efforts to maintain cash flow are critical to maximizing the eventual sale price of the business.They may need to shoulder extra duties as your attention may wane or become diverted to your future retirement plans.Most importantly, third-party buyers are unlikely to buy your company without the continued presence of your key employees.So, how do you ensure that your key employees will remain at their posts, even as you prepare to leave yours? One short-term incentive plan that can be set up to meet your employee incentive Exit Plan objectives is the Lifetime Stay Bonus. The Lifetime Stay Bonus not only provides recognizable incentives for your key employees to stay on board and help your business through the transition period, but they also provide a level of stability and certainty for your company and its employees to succeed.In our experience, selling owners typically have three objectives with respect to their key employees:To motivate key employees to increase the company’s cash flow in the period leading up to the sale.To keep key employees on board before, during and after […]

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Select the Right Exit Path Series- Part 3: Selling to Third Party

As discussed in the previous issue of Grow and Protect Your Business, it is important to select your successor early in the Exit Planning Process. In the past two issues, we have discussed the advantages and disadvantages of transferring ownership to children and selling to other owners or employees. The last scenario that we will look at during this Exit Planning Review™ series of articles is the sale to a third party. The market has indicated that 20 percent of businesses are for sale to a third party, but only one out of four actually sells. For businesses above $10 million per year; however, the odds improve to 50 percent.1 In a retirement situation, a sale to a third party too often becomes a bargain sale – most often the only alternative to liquidation. This option becomes necessary in many situations because owners fail to create a market for their stock through sale to family members, co-owners or employees. The following are advantages to selling your business to a third party, as well the disadvantages associated with this type of exit plan. It is important to compare the advantages and disadvantages of this type of transfer scenario when choosing your […]

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Select the Right Exit Path Series- Part 1: Sale to Other Owners or Employees

As discussed in the previous issue of The Exit Planning Review™, it is important to select your successor early in the Exit Planning Process. One of the great advantages of having other owners in your business is that they can be your means for retirement. Especially with smaller businesses, a common Exit Planning technique is to have a younger individual buy into your business while you are still active. Upon your exit, the younger owner will purchase your remaining stock.

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Unintended Consequences… Without Your Transition Planning

Stephen Manicek sat quietly and stared out the window of his car as it sat parked in the parking lot of Manicek Microtek. Until a few minutes ago, he had been president of Manicek Microtek, one of the country’s largest telecommunications parts distributors. Now he was out of a job and felt he was a victim. Naturally, his first thought was to sue those responsible for his misfortune. The targets of his wrath were his younger sister and his mother. They had forced him out of the business. What should he do next? What could he do next?

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What To Expect From A Buyer

Assuming that all business owners (except for those forced to liquidate) will eventually sell or transfer their companies, we often focus on what it takes to be a well-prepared seller. Setting exit objectives, planning to minimize the income taxes on the ownership transfer, building business value and selecting a skilled Team of Advisors are some of the most important items on any “Savvy Seller Checklist.”

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Random Quote

“The servant-leader is servant first… It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. A servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. While traditional leadership generally involves the accumulation and exercise of power by one at the “top of the pyramid,” servant leadership is different.”

— Robert K. Greenleaf, The Servant as Leader