2016 and its Lessons in Exit Planning and Transactions
2016 and its Lessons in Exit Planning and Transactions
2016 and its Lessons in Exit Planning and Transactions

Happy New Year to everyone. Hope all your dreams came true in 2016. If not, as a business owner, it is time to focus on the future. I want to start off the new year by first discussing in general the exit planning and transactions that we handled in 2016 to point out some things they all had in common. Then over the next several weeks, we are going to go in depth into each of the transactions as mini-case studies. So let’s get started.

Business Valuations are Important

First, 2016 was a banner year for us. Like many in the Exit Planning and Mergers and Acquisitions business, there was a lot of activity. We were involved with just a little over $23 million in transactions. They ranged from a couple of small main street transactions to a merger of two large printing operations to the sale by owners to an ESOP with an SBA loan.

So what made all of these transactions similar. First, not one of the companies had a recent valuation. The closest was over 9 years prior, and was just a quick estimate by their accountant. All the rest, had no valuation and basically only a very rough idea of what their company was worth. As an add to this unfortunate state of affairs, we turned down representing for sale over half a dozen potential clients because of their perception of what someone would pay for their business. Basically it is not worth any one’s time to try to sell a business at crazy prices. They just DO NOT SELL! Just as interesting, they get very little attention from prospective buyers in the marketplace. So, the take away from this is GET A VALUATION. Get it now. Use it to understand your business.

Have a Plan

The second thing that is consistent, but not universal in the businesses we represented was that the businesses were not ready to sell. Poorly done financials. Unexplained expenses. Unaccounted for income. Poor records. Poor succession planning. Poor planning in general if there was any planning at all. The remedy for the above is to have a plan. Try to look at your business as if it was for sale and you are the buyer. Are the records clean. Can you show what you made and what you paid yourself? Would you find your business attractive?

There are several other things, but the above are 2 of the most important and the reason that 80% of listed businesses never sell.   So get a valuation or do it yourself. It is not that hard and it will point out many things in the process to you the owner. And maybe just as importantly, make sure your company is ready to sell. If you have any questions about how to best value or sell your business, contact me today!

commercial real estate advisor bio

Camm Morton of Baton RougeAbout Camm Morton – Camm Morton, Owner/Principal with VR Business Brokers has a 30-plus year history spearheading complex office, industrial, retail, land and investment ventures throughout the country. He has established an exceptional record of noteworthy accomplishments including bold mixed-use projects, Traditional Neighborhood Developments (TNDs) and the high-profile and successful renovation of the historic Hilton Baton Rouge Capitol Center in downtown Baton Rouge. Camm has also owned and successfully developed real estate in 29 other states and Puerto Rico, including his own company and a billion dollar NYSE-traded REIT (Real Estate Investment Trust). If you would like to contact Camm, you can call him at 225.663.5999 or email him at cmorton@vrbatonrouge.com.

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