Protecting Your Business Nest Egg

Copywrite 2015 B2BPlanner Ltd.

You have one chance to get it right

We will discussWhy Plan Why Now

Why You Key Planning Considerations

We will not discussValuing a business Selling a businessLegal or financial details

Founded 2003

Meet my client:

Let’s call him Dr. V. He started a business in 2003.World renowned in his fieldLead technical person in the company A few years ago he got cancer and died. I was advising the owners at the time

This transition wasUnplannedVery difficult and stressful Risked the company’s survival

I want you to avoid this situation in yourbusiness or with your clients

Formal operating agreement addressing transfer of ownership on death to partners

X Debt to a minority shareholder

Did not have:X Key man insurance X Team of advisorsX Business continuity planX Staff Succession plan X Knowledge of family about the business

2 year federal research grant from NSF Business advisor able to step in to run business

What Happened?

Why Didn’t Dr. V

Plan for Transition?

Denial of his mortality

Fear of losing identity

Fear of an unknown future

Didn’t have the time

? Excuses:

“It’s too early to plan” (and execute)

“The process is too complicated/expensive”

Debilitating illness or death

Divorce

Inheritance by family

Sale of business to a third party

Transfer to a business partner

Sale to the management team

Business Merger

Just shutting down!

Transitions to Consider

Planning To Sell?Getting out is harder than getting in

5 million businesses

Will go up for

sale in the next

5 years

Today Only 1 in

4 businesses

for sale are

sold

Planning To Sell?

5 million businesses

Will go up for

sale in the next

5 years

1 in 10 may sell

in the future

Of available Capital To buy small businesses

40% of Owners Plan For Their Kids To Take Over … but

Only

30% of inherited

businesses survive

into the second

generation

Planning for Inheritance?

12% survive into the 3rd

generation!

What Is At Stake?

60% of

Owners

Do not know

The true value

of their

business

80% of

owners

have

over 50% of

their wealth in

their business

70% do not have a succession plan!

How Do You Like The Odds?

You CAN change them with a transition plan

The FACT is…

Successful transition plans have PAID the owners$1000-2000 PER HOUR for the time they investedin developing their plan .

0 2 4 6 8

<$499K

$500K - $1 M

$1M - $2M

$2M- $5M

$5M - $50M

2.6

2.9

4.3

4.5

5.4

Average EBITA Multiple

EBITA Multiple for SCORE >80

Increased Selling Value Based on EBITABy Increasing “Sellability”

Source: “Built To Sell”, 2012

Business risk exposure economy, industry, competition

Future Growth Potential

Business “resilience” and stability

industry, size, geographic location

Business performance

Availability of financing

Ownership structure

Factors Impacting “Sellability”

What Position Do You Play?

Business Owner

BusinessLawyer

Accountant

Business Broker

Financial Planner

Business

Advisor

Transition Coach

Family

Estate & Tax

Planning

Transition Planning is a “team” sportThe team …

Assess Plan Execute

Planning Can Be Done In 6 Months

Phase III

45-60 Days

• Inventory

competencies

• Individual

development

• Accountability

• Measure

Phase II

45-60 Days

• Future Goals

• Gap Analysis

• Performance

management

• Action Plan

Phase I

30-60 Days

• Owner

Commitment

• Establish Team

• Baseline

Assessment

Successful Execution Can Take Years

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Form Team

Fact Gathering

Forecasting

Personal Needs

Valuation

Set Objectives

Transition Plan

ManagementDevelopment

Building Value

Ownership transfer

Additional Payouts

As the transition approaches, business

moves from being an income stream to

becoming a wealth generating asset

6 Steps To A Successful

Business Transition

1. Build Your Team

2. Determine Your Required Net Proceeds

3. Get A Realistic Valuation And Transition Cost Estimate

4. Develop a Formal Transition Plan

5. Plan to Minimize Taxes and Fees

6. Improve the Business to Close any Gap

Succession Planning

happens at every stage of a business’s life-cycle…

www.ohiobusinesshelp.com/business-transitionart@OhioBusinessHelp.com

937-895-0481

I am committed to preserving Entrepreneurial wealth. Contact me to discuss your situation.

Art Helmstetter