Ultimate (O)X - Getting Real With Valuations - Wendy Dickinson

Wendy Dickinson - "Catalytic Conversation$"​

Introduction
 As a business owner, you are the expert in your business.  Chances are, you do not buy or sell, or value, other businesses regularly.  Mergers & Acquisitions, M&A, is another field of expertise and study.  Those who do it well, know it as a process requiring preparation.  

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Show Objectives - The Why
An accurate, thorough valuation is the key to leveraging your business when it comes to selling your business.  As the owner of a business, you need a valuation based on market and industry data, as well as documentation of the assets within the business.  You don’t need someone’s best guess, you need their knowledgeable assessment - an independent valuation.

This isn't something that you ought to do yourself.  You may be at the top of this organization.  You may have a great management team, accounting firm, and attorney for your business.  Hopefully, you also have a “board of trustees” for your company, and for your personal life that includes, friends, family and your spouse or partner.  However, it may be that none of these people have built a life or career on buying and selling business, much less valuing businesses for the market.  The input of these individuals may seem comforting, reassuring and affirming.

I challenge you to consider that this may be the one time in your career where you need people who offer different perspectives.  Your successful close may call for people who challenge your opinions and valuation.  Your future may depend on people who can market your business strategically, financially, and tell a compelling story based on data to support the valuation of your life’s work.  

Key Issues - Owner Perspective:

1. Many owners don’t know the steps of the M&A process.
2. Many owners haven’t properly prepared the data. This is where you dashboard of metrics, accumulated over time will prove to be priceless.
3. Many owners haven’t thought through their priorities for the sale, areas to offer as compromise v. those areas of inflexibility, or consulted a financial planner to determine what amount the owner needs to gain from the sale.

What You Need to Know - The What

Potential Problems:

• Only 20-25% of companies tht go up for sale, 
•  Owners, immersed in daily operations, bow to the limits of time, money & energy focused on working IN the business, not ON the business.
•  Owners fail to invest in keeping up on industry data as well as learn about the sales process.
•  Dashboard full of metrics is incomplete, therefore valuation seems to come out of nowhere - taking the owner by surprise.

What You Need to Do - The How

1.  Assemble your team - attorney, CPA, broker or investment banker “
   1. Choose those who complement your skills 
   2. fill in the gaps of your knowledge and abilities
   3. align with your values 
   4. agree with your priorities
2. Begin to invite investment bankers or brokers to “pitch” their approach to selling your business or finding an acquisition: 
   1. Note: you will be asked to provide sales data, financials, market analysis, etc. to allow each to accurately assess your position, value, etc.
   2. You will want to ask about the confidentiality policy
   3. Investigate best practices, ethics
3. Use the valuation process as a means to begin to:
   1. Prep your company for sale
   2. Develop a relationship with a broker or investment banker
   3. Uncover the strengths and weaknesses within your business to allow you to build value within the business which will allow you to realize the amount of money you would ideally like to recover from the sale of your business.
4. Practice C.R.A.V.E. - compilation, review, audit, valuation and estate planning.
5. Avoid G.I.V.E. - Grandiose, Inflated, Valuation Expectations!  KNOW YOUR NUMBERS

Shows

•  Previous: EPISODE E5.06.3 (O)X – Value Added SOP’s  
•  Next: EPISODE E5.08.3 Create (O)X – Reinvention Plan

Resources:

1.  The FIT of Strategy, Value, and Price: Maximizing The Value of Your Business, by Enrique Quemada, 2018.
2. BizBuySell site to explore the sales of different businesses. 
3. Schedule a call with me to discover how to prepare your business for a sale.  1-804-372-7575 or email me at wendy@ascendcochingsolutions.com or visit my website at https://ascendcoachingsolutions.com.
4. Mike Metzger, Broker, Murphy Business, brokers in the Richmond, VA area, email Mike at m.metzger@murphybusiness.com
5. John Dickinson, Investment Banker, Dickinson Williams & Co., Richmond, VA covers North America, email JD at jdickinson@dickinsonwilliams.com or visit their website at www.dickinsonwilliams.com.
6. Jennifer Berdell, CFP®, CDFA®, Founding Partner Kinloch Capital, email Jennifer at jennifer.berdell@kinlochcapital.com or visit their website at www.kinlochcapital.com.

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