Finding the path to a successful exit

Sales to key employees, employee stock ownership plans, transfers to children, and sales to third parties can all be excellent exit strategies for business owners when it comes time to sell. But if you find yourself wondering which of these is right for you, you may be like the car buyer who asks if the Lincoln, Cadillac or Lexus is the best vehicle. There can be no right answer without more information about you and your specific needs and goals.

When a business owner asks questions like this out of the blue, it can indicate that his plan for exiting the business is adrift, or that his advisors lack experience in developing a coordinated approach to preparing for the future. They have not asked the questions necessary to start the owner on the path to a successful business exit.

In order to know which route is best, we need to understand what goals a business owner wants to achieve. It's our job to ask you the right questions, so that you are able to clarify your goals and develop an exit strategy that enables you to achieve them.

"The Charter Group can help you get started, whether you are planning to exit 5, 10, or 15 years from now. The important thing is to get your plan in place."

We recommend beginning your exit planning journey with two things: 1) a road map and 2) an experienced guide. The Charter Group can provide you with both. We serve business owners throughout the Midwest with comprehensive M&A, valuation and exit planning advisory services. We ask the right questions so that you know where you are going, who is going to help you get there, and the route you are going to take.

Who should be on your advisory team?
Your exit planning advisory team should consist of the following professionals:

• M&A / Exit Planning Advisor
• Attorney / Estate Planning
• Tax Advisor / CPA
• Financial Planner
• Insurance Professional
• Valuation Expert

Why should I have all of these advisors?
First, no one professional has all of the answers. The issues you face in exiting your company are complex and will require input from professionals in a number of disciplines. For example, an accountant skilled in exit planning brings a host of skills (especially tax minimizing techniques) to the process that your attorney may not possess and vice versa. In addition to being skilled in a particular practice area, each advisor should also be familiar with, and better yet, experienced in exit planning and should know how to work for you as a member of an advisory team.

Lawyers and CPAs are expensive. Won't this team cost me more money?
Assembling and meeting with your advisory team not only facilitates the exchange of information and ideas, but it can reduce your costs by increasing the efficiency of each advisor. Instead of your advisors proceeding in a disjointed and inefficient manner, have a single meeting with all advisors present to coordinate everyone's efforts.

How do I assemble my team?
Many business owners have worked with most of these professionals individually in the past. But no one advisor can guide you through this process alone. The Charter Group can help you assemble your team charged with a common goal: helping you to leave your business in style.

For 24 years and via 400+ successful transactions, The Charter Group has helped business owners optimize ROI throughout a business's most important transitions, from inception through growth and eventual sale. A leading M&A advisor, we specialize in transactions ranging from $10 million to $100 million. Whether you're ready to buy, grow, or sell your business, The Charter Group will skillfully guide you to what's next.

Increased Value Multiples Forecast for 2013

Business publication MiBiz asked the region's top executives to contribute to their Crystal Ball 2013 special edition highlighting "insights, economic sentiment, and forward-looking strategies from the region's business leaders." When asked to provide his take on the M&A industry, here's how John Kerschen, Managing Director, The Charter Group, replied:

"For the first time since the onset of the Great Recession, our national economy enters a new year with faint tailwinds instead of dramatic headwinds. The unemployment rate is finally below 8 percent, interest rates remain at historic lows, and assuming a fiscal cliff can be avoided, general sentiment has improved from 24 months ago - resulting in a positive outlook for the M&A industry.

In the last five years, business owners have been reluctant to sell for a number of reasons, including a valuation gap between expectations and true market value, slow recovery of operating results coming out of the recession, perceived lack of attractive public market investment prospects for the proceeds from a sale and a challenging credit environment as banks recovered from their own issues.

Additionally, larger corporate or strategic buyers were exceedingly conservative as they cut costs in an effort to survive the recession. However, over the past 12 months, strategic buyers have emerged leaner and with ample capital for acquisitions to compete with already hyper-aggressive financial buyers (private equity groups).

Today and for 2013, the result is a robust and seller-friendly market for well-performing businesses. As owners increasingly feel more comfortable about their businesses, we believe there will be a release of the pent-up supply of attractive and marketable businesses. Combined with the current high availability of cheap capital and high quantum of financial buyers, (that) should result in significantly increased deal flow and value multiples in 2013."

See the complete MiBiz Crystal Ball 2013 special edition at What keeps you up at night? Looking ahead to 2013.

For nearly 25 years, The Charter Group has helped business owners optimize ROI throughout a business's most important transitions, from inception through growth and eventual sale. A leading M&A advisor, we specialize in transactions ranging from $10 million to $100 million. Whether you're ready to buy, grow, or sell your business, The Charter Group will skillfully guide you to what's next.

Why private equity groups and investment bankers keep shaking your tree

As the national economy continues its recovery, many business owners find themselves inundated with letters and phone calls from private equity groups and investment bankers representing "buyers." They're basically shaking your tree to see what falls out.

 

The large amount of capital raised by equity groups in 2005-2007, combined with many corporate balance sheets flush with cash have created a unique circumstance in the market today - a lot of money chasing too few companies ready to sell. Following basic supply and demand principles, this is driving up multiples for sale transactions.

 

When professional buyers like private equity groups and investment bankers call you direct, they are hoping to avoid the involvement of an intermediary and thereby increase their odds of getting a "good deal" - from their perspective! Unfortunately, oftentimes that may not equate to an optimal deal for the business or you as the owner.

 

When you get this type of call, you and your existing team of business and financial advisors don't need to go it alone. Having an experienced M&A firm in your corner can provide you with the tools and information you need to determine if that Buyer is the best buyer for your business and to get the best deal for your business. The Charter Group maintains a focus on what's in it for your shareholders and ensuring that you achieve your transaction objectives.

• Experience and internal tools to determine what your business is really worth in the current economy and state of your industry

• Working "on point" to manage the business sale or acquisition process - keeping the work load and details of an emotional and difficult process off your plate; leaving you and your existing team free to concentrate on running the business and continuing to build value

• A proven track record of bringing a 25-50% price premium via a correctly managed process

How an M&A advisor can improve your bottom line 

When a regional distribution company was approached directly by a national competitor with a purchase offer of $12.5 million, they realized they needed someone in their corner. They asked Charter to review the proposal. Our valuation showed the company was worth significantly more, so we pursued additional buyers, prompting five letters of intent.

 

As a result, the national competitor increased its offer to $18 million+ and we closed the deal. The final transaction was valued at nearly 50% more than the selling shareholders would have achieved without a better understanding of the market and by "going it alone."

We're in your corner                                      

The Charter Group specializes in transactions ranging from $10 million to $100 million, providing personal attention that large cap M&A firms simply won't deliver to this segment, while providing a high level of expertise that local business brokers can't match.

 

We look forward to sharing our expertise with you and helping you achieve success as a business owner, whether you are ready to buy, grow, or sell your business. To get started, please feel free to call us at 616.235.3555 or fill out our consultation request form and we'll provide you with a complimentary and completely confidential consultation.