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trekking
practical strategic thinking and action
newsletter issue #73
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Getting Ready to Sell in 2012+
At the March 2010 Exit Planning Exchange (XPX) Summit, the lunchtime keynote speaker
was investment banker and author Rob Slee. Rob is something of a visionary.
He has intriguing ideas about new business models, insight into the changes that
have shaped business today and how our competitive market has become "U.S.
against the world".
In his presentation to XPX, Rob described what he calls the "U.S. Ten
Year Transfer Cycle" and explains why this transfer cycle is so important to business
owners. Rob points out that in the past
three decades (the 80's, 90's and whatever we end up calling the first decade
of this century), we have experienced a very similar economic pattern that
seems to be moving in a ten year cycle. This cycle accounts for our most recent
recession that began in 2008 and, hopefully, we seem to slowly be escaping.
This means that the current market is primed for buyers and will
remain a 'buyers' market' until 2012. Around that point, financing should flow
again from banks to potential buyers, generating higher prices for companies and resulting
in more of a seller's market. Of course
there are no guarantees, but assuming this is the case how should business
owners prepare?
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a different approach
To be ready for the "up" cycle, look at three areas:
1) top line
revenues - After all the cost cutting most businesses did in 2007-2009,
companies should now be looking to grow the top line again. Potential
buyers
will look for positive trends in revenues and profits entering the next
selling
cycle. Remember, you can't grow by cutting. It's time for corporate
investment on many levels and time to
incorporate new ways of thinking to get values up and businesses back on
their
feet and hiring. Time is ticking--the seller's market is only a couple
of years
away...
2) international - Any competitive analysis by a business owner in
today's market has to take into account foreign competition for both
manufacturing and services. It is no secret that the BRIC (Brazil, Russia,
India, and China) nations have been exploiting their vast
raw materials and cheap labor to take market share away from U.S. businesses
for decades. Business owners need to be on the defense - looking ahead the next
five years they must be self-critical and analytical in order to envision how they
can combat this competition.
3) intangible capital - Finally, we espouse the under-appreciated importance of intangible capital: the
human, relational, and structural capital of a business. These assets accounted for 70% of the average
merger in the past cycle and will play an even greater role in the future. In your self-analysis, focus on these
intangible assets and you will uncover the power and potential of your business.
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reading list
Private
Capital Markets: Valuation, Capitalization, and Transfer of Private
Business Interests (Wiley Finance) by Rob Slee
Rob's first book mentioned above, "Private Capital Markets", was published in
2004. It is the first book to really
document this important sector of American busine ss. In business schools across the country,
public capital markets receive the greatest scrutiny despite the fact that
private business is the largest employer and greatest generator of GDP in the
country.
Colleges are now starting to teach about Private Capital Markets and using this book as the text.
As a follow-up to this tome, Rob, through Pepperdine University,
authorized a survey of banks,
asset-based lenders, mezzanine, private equity, venture capital, hedge funds,
business owners and other capital providers. The purpose of the survey was to understand the true cost of capital in
the private business world, a heretofore little examined area. He will reveal and
analyze the results of this survey at the Alliance of Merger & Acquisition Advisors Summer Conference on July 20 at the Chicago
Hilton.
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announcements
Our book Intangible Capital - Putting Knowledge to Work in the 21st Century Organization will be released next week. More on that
in the coming days!
On Wednesday, May 12,
the Exit Planning Exchange Connecticut chapter will have a breakfast in Westport, CT with a panel discussing "The Top 10 Things Every Business Owner Must Know
Before Their Exit". Panelists will include: Ken Ducey from Fairfield Capital (busi ness
sales and valuations), Jim Malski from
Action Coach (business coach), Ryan Sheppard, Michael J Knight (CPA), Rob Teicher of Brody Wilkinson (tax-T&E) and Tom Walsh of Brody Wilkinson (corporate law).
On Wednesday, May 19 at Babson College in Wellesley, MA there will be an XPX Roundtable on
Human Capital. This workshop will
use a case study to examine issues facing a company and  to determine which
might be best solved by human capital experts or by teams that include them. The workshop will be led by XPX Boston
members Bonni Carson DiMatteo, Katharine White and Harvey Wigder.
XPX-Boston Member dinner - Thursday
evening, May 27 at Papa Razzi, 16 Washington St.,
Wellesley, MA.
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Trek Consulting is proud to announce that our Trekking newsletter was named a 2009 Constant Contact All Star! |
about trek consulting
Trek works with owner-managed businesses to develop and execute action plans for
growth. Trek also works with the owners to prepare for their successful
exit by coordinating the resources necessary to increase and preserve
the firm's value, creating the succession plan and assembling the right
transaction team, financing and post-transaction plan. Our clients report improved market focus, greater
revenues, better margins and increased profits. To learn more about
Trek Consulting and how we can help you improve your company's results,
visit us on the web at www.trekconsulting.com or call us at 781.729.1008. |
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