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 Posté le: Lun Sep 30, 2013 6:45 pm Sujet du message: Business growth: Transition points |
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PDG Mobility Technologies owner Louis Belanger is in constant recruitment mode and is putting corporate systems in writing as a way to plan for succession|Richard LamBy Glen KorstromTue Sep 10, 2013 12:01am PSTOwner of PDG Mobility Technologies Louis Belanger had little competition when he spent “millions” of dollars to buy his 45-employee company in 2011.The previous owner had health problems that forced him to sell the company but he had not cultivated a leadership team outside of Belanger, who was the company’s general manager.Many processes were not written down and it was not clear to other outside buyers exactly what the value of the company was. So,[url=http://www.moncler-sale.org]moncler down jackets[/url], Belanger believes he got a good deal on the purchase. Since the transaction, he has taken some of these lessons to heart and gone into constant recruitment mode.“You want to grow the company and have enough critical mass that it supports a solid team of professionals,[url=http://www.moncler-sale.org]moncler outlet[/url],” he said. “You need a certain amount of cash flow to be able to do that so that’s what I’m working on.”As a business expands from being a small to medium-sized venture, succession planning increases in importance.Most business owners, however, are more focused on making their venture’s growth trajectory as steep as possible instead of planning ahead for how to extract the highest possible cash-out if they are suddenly forced to exit the business.A TD Waterhouse poll found that 76% of Canadian small-business owners lack a succession plan.This lack of foresight is increasingly important given a Canadian Federation of Independent Business poll that revealed that nearly half of all business owners plan to transition out of their enterprise at some point in the next five years.B.C. has the highest per-capita number of small and medium enterprises in Canada with 80 for each 1,000 residents,[url=http://www.moncler-sale.org]moncler on sale[/url],[url=http://www.moncler-sale.org]moncler outlet[/url], said Vancouver-based PWC partner Jim Crooks.The options facing a business owner who wants to exit a venture include:•selling shares to a third party;•selling or giving the business to a family member;•transferring shares to a partner or a group of employees;•taking the business public; or•winding up the business.Winding up the business is usually the last resort as it is the least profitable. Selling or giving the business to a family member is common but advice on how to structure the deal and the tax ramifications varies widely and depends on individual situations,[url=http://www.moncler-sale.org]moncler on sale[/url], Crooks said.The exit-price in each of the three other options is facilitated by a similar set of actions.The single most important thing that a business owner can do to exact the highest sale price is to make it clear that the business is solid without the current CEO and owner.That means hiring a solid management team that is able to run the business in the owner’s absence. It also means making it clear that relationships with customers and suppliers are not built solely by a personal rapport with the owner.Crooks explained that personal goodwill,[url=http://www.moncler-sale.org]moncler sale[/url], such as strong relationships with suppliers and customers is not valuable in a negotiation for the sale of a business. Better is to spread out the communication with customers and suppliers so that others in the business also have a rapport. That will help that goodwill be seen as something that belongs to the business as a whole.“Business goodwill is the brand and patents,” Crooks said. “Personal goodwill is relationships that are not transferable.”The best way to determine what goodwill is personal and what is business-related is if the owner has demonstrated that he or she can go on a months-long vacation and the business runs fine during that absence, he added.Making sure that all customer contracts and company processes and systems are written down is another important task to ensure the highest possible sale price for a business, he added.Having detailed bookkeeping is an extension of this. The easier it is for a potential buyer to look at the books and understand the financial performance of a business, the more likely it is that the potential buyer will bid for the venture.Extra clarity to ensure that there is a visible growth trend in revenue, profit,[url=http://www.moncler-sale.org]moncler sale[/url], earnings before interest,[url=http://www.moncler-sale.org]discount moncler jackets[/url], taxes, depreciation and amortization (EBITDA) and other metrics also helps the sale price, Crooks added.Without taking these steps, sales options can be limited.•Key points owners should consider when preparing to exit their businesses•Strengthen your management team to ensure you have sufficient depth and expertise;•Evaluate the business goodwill versus current owner “personal” goodwill (business goodwill can be transferred while personal goodwill cannot);•Ensure that your financial performance is growing or at least remaining strong, not declining;•Prepare thorough and detailed financial reports to provide comfort to potential buyers;•Develop realistic but strong financial forecasts;•Ensure that key contracts with customers and suppliers are in writing;•Try to have a diversity of clients and suppliers so you are not dependent on just a few;•Address any outstanding legal or environmental issues before starting a transaction;•Understand your company’s working capital history and trends;•Understand your company’s specific value drivers and the market values in advance of a transaction;•Ensure you have done tax planning.Source: PWCTags: water, Canadian Federation of Independent Business, earnings, management
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