4.4 Teaser And CIM - Confidential Information Memorandum
(From our online program Sell Your Business 4 More.
Free when you engage with WarrenBDC)

​As part of the listing process and in order for your Intermediary to be able to provide good and accurate information to a prospective Buyer, they will need to assemble the following information. Starting your work now and being ready for the Intermediary is key to selling faster and for more.

As soon as you select the Intermediary and or as part of the selection process you can review it together. Do not hesitate to ask questions for further clarity, and make sure that you are both on the same page. In fact the entire transition team needs to be on the same page. Together you will have captured the greatest value of the business to be presented to a prospective Buyer in the best light.

It is not unusual for prospects to ask for further specific information as part of their review. When this happens we urge you to treat these requests with urgency as it is imperative to keep the process moving, you don't want the prospective Buyer to go looking at some other business over yours! They are always looking.

Buyers will need to first see a Teaser followed by a Confidential Information Memorandum The Teaser is a generically worded high level overview. Since this document will be going to the public and not subject to an NDA, it should be very generic, not identify the Seller but contain sufficient details to interest a Buyer to look into your business a bit further. This document will be created together with your Intermediary at the time of listing.

Once the Intermediary has gathered some interest from a prospect and determined suitability they would then release the secondary document the CIM or Confidential Information Memorandum always under a signed NDA.

The secondary set of documents, CIM, typically includes:
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•   3 years Income statements.
•   Balance sheets.
•   Cash Flow statements.
• A 'business deck' to tell the story and better explain the business. Staff, industry, positioning, customers, locations etc.

These documents need to be accurate and correctly reflect the reality as they will become the basis under which a Buyer will issue a LOI or Letter of Intent and begin the Due Diligence process. Any variance here between what you present and what is found out to be the truth by the Buyer will result in a discount, failure to close, or if really bad, litigation for misrepresentation and Buyers costs of Due Diligence.

Exercise - Questions, Tasks And Documents To Be Supplied To The Intermediary

Your Intermediary will use this information to effectively communicate your story to Prospective Buyers.

A. The quick business summary or Teaser to share with prospective Buyers.

B. The detailed Confidential Information Memorandum (CIM) - which is only ever shared subject to your approval with a prospect that has been vetted by the Intermediary and who has entered into an NDA with you.

C. They will also use this knowledge to help validate and discuss the business further with prospects who have received a CIM and provided a signed NDA.

The information to be assembled will include the following and likely some additional items particular to your selling situation, company and industry.

1. A brief history of how your business came to be, significant events, items that help paint a story. These may be the same items you would relate to a new or prospective client.

2. Last 3 years of Accountant prepared financial statements - Income statement, Balance sheet and Cash Flow Statements for the business/s. If more than one financial entity then provide similar documents for each or a consolidated set of statements. Indicate intra company transactions, and whether all statements are prepared to the same accounting and revenue recognition standards.

3. Year To Date 'in house' financial statements with aged Accounts Receivable, Accounts Payable and Inventory list for the same period. If multi-company you will require the same for all entities.

4. Statement of earnings normalization (EBITDA) in line with fiscal year ends that identifies all non-recurring expenses and salaries and other expenses directly related to you the Seller.

5. List of top 5 - 20 customers for last 3 years by $ volume & indicate length of relationships. Typically 20% of your customers represent 80% of your income.

6. List of key suppliers representing 60 - 80% of your spending and $ amounts spent with them over the last 3 years. Also a few words about each, including length of relationship and if there are any formal exclusivity agreements.

7. Staff Organizational Chart. Also need to identify key personnel, tenure and what they do.

8. Brief biographies for each of the key personnel identified in the Org. Chart.

9. Key terms about Building Leases, Car Leases, Equipment Leases, Long Term Obligations.

10. Who your key competitors are and a few words about each. Any changes recently, bigger, smaller, new management or important internal key person promotions.

11. Who manages your Supplier relationships? Will there be an impact by your selling or easing back your personal involvement and how long do you think it would take to transition back to normal?

12. Who manages your top Customer relationships as in #5. Will there be an impact by your selling or easing back your personal involvement and how long do you think it would take to transition back to normal?

13. What is the typical sales process and marketing out-reach program? This question can be answered at a high level for now and will be required to be provided in more detail as you go through further Buyer discovery.

14. General questions

14.1 What are some of the potential barriers to entry of others into this market?

14.2 How and why are you winning business?

14.3 Why do customers keep coming back?

14.4 Change in any key customers over the past three years and if so why?

14.5 Change in any key staff in past three years and if so why?

14.6 Do you have ongoing contracts with customers / commitments?

14.7 A few sentences or at most paragraph for each, highlighting any; Special Intellectual Property, Patents, Equipment, New Products, New Clients, Recent Growth, Future Forecasts, Significant events.

14.8 Other points that you feel would improve the business case.

You are either delusional about the value of your company or you are working with a verified figure as a potential selling price. There are typically two different kinds of Sellers when it comes to Owners wanting to sell their business. 

OWNER 1. The Owner who has a realistic view on what his/her business might be worth, how much it might sell for. They may have spoken with their Accountant, a Business Broker, an M&A firm or a Consultant who specializes in selling businesses. Hopefully more than one.

Insights from friends who have sold businesses within your industry may have some similarities between their situations and yours. They could be a reliable source. But need to be verified.

Realists usually arrive at a value with about a 10 % margin of error.   

OWNER 2. The other Owner who has no idea what their business might be worth and they have not done any of the work to find out. They have a figure in mind derived by simply pulling it out of the air. Or the selling price is based on a need for X amount of dollars. What they think might be needed for an easier retirement. What they think they deserve after decades of building the business. Or they just have the desire to sell for this magic number. A number that comes from nowhere tangible.

Typically the Owners who have manufactured a number tend to be way off. I speak to Owners all the time who are looking for a $6 million dollar payday. However, when you look at the mathematics of the business it's actually worth $600,000. Now that sounds like a big spread and it is. If you're going to dream, dream big.

The reality is, Owners with a reasonable understanding of what their business might be worth and those that do not are two very different Sellers. Owners living in a fantasy world believe a Buyer should pay a lot for the opportunity the business offers. News flash, if it has so much opportunity why haven't you done it yourself? If I'm doing the work to seize the opportunity why would I pay you more than the business is worth today? 

Owners living in the real world are not frustrated by the selling process or disappointed by a lack of offers. The Selling process can be a rewarding and 'relatively' stress free experience. Or it could be the most painful, discouraging and debilitating experience of your life.

Up to you.
​
So the moral of the story with this weeks post is about being realistic. If you have no idea what your business might be worth give us a call. We'd be happy to help you work that number out.

Truth counts and hurts sometimes. We will give you a realistic view of what the business could possibly sell for. You might not like what we have to say or you might be thrilled by what we have to tell you. We won't know until we look at the numbers. 

Which Owner are you? The realist, the dreamer or the one willing to hear the truth regardless of what it is.

Before you run off and try to sell your business for X amount of dollars, it might be smart to get an accurate accounting for what your business could actually sell for. 

So click on one of the buttons below to DIY (do it yourself) or let us help you.

Selling your business is typically not easy. It requires preparation of both the Owners personal stuff and the company items that need to be addressed.

In fact the better prepared you are, the easier it is to sell and the more money you will get.

Getting prepared starts with looking in the mirror. Coming face to face with your desire to prepare and a realization of how close or far you are from selling.

Here is an Owner focused visual aid to quickly help bring your reality into focus.

Selling your business is typically not easy. It requires preparation of both the Owners personal stuff and the company items that need to be addressed.

In fact the better prepared you are, the easier it is to sell and the more money you will get.

Getting prepared starts with looking in the mirror. Coming face to face with your desire to prepare and a realization of how close or far you are from selling.

Here is a company focused visual aid to quickly help bring your reality into focus.

Why Do You Require An Intermediary To Sell Your Business?

Intermediaries, bring Buyers and Sellers of businesses together and facilitate the process. Hopefully to a positive conclusion in the form of a successful and confidential transition.

As a business Owner you're running the company day to day. You don't have the time for a steep business selling learning curve or to fulfill all the necessary requirements for documents, discussions, decisions, negotiations and tasks as outlined in our program.

You require a transition team leader and/or Intermediary to complement you and take on all the other responsibilities for a successful transition.

The Intermediary starts by working with you to fully understand what your expectations for a successful transition are. If they are not, in the Intermediaries experience, achievable you need to work together to come to a compromise or agreement. Remember the Intermediary should be on your side working for you. Not just trying to complete a transaction to get paid.

Their next step is to gather information to determine a realistic timing and achievable selling price for your company. This is the opening challenge, coming to an agreement on these two items. If you can't do this then the exercise will be difficult and possibly not worthwhile for the Intermediary or the Seller.

Seller's Job And Intermediary's Job

During the transition process, the Seller’s job is to do what they do best, which is to run daily operations continuing to maximize profits. The Intermediary's Job is to prepare the presentation of company financials, corporate story, NDA, marketing materials ie Teaser or introduction document and CIM - Confidential Information Memorandum, market your business, identify, qualify and educate Buyers, and then negotiate the sale. 
All the while keeping the Seller 'sane' during a very stressful selling and transition process. At some point they may have to talk you down off the ledge.

Determining An Achievable Fair Market Value For Your Company

As a Seller you want to work with an Intermediary possessing a strong knowledge of current, up to date, market conditions. They will explain the different methodologies as to how businesses are valued in the current marketplace.

After reviewing all the pertinent company information, your Intermediary will give you a range for what the market is currently paying for comparable businesses. If necessary they can arrange for a formal business appraisal from an accredited certified business Valuator.

Facilitate The Negotiation With The Buyer

Selling your business will likely be at least or more emotional than you might expect. Much like selling your home, there is a huge benefit in using an Intermediary to quarterback all aspects of the transaction while keeping both sides calm. The Intermediary will communicate your thinking to the Buyer without the emotion and return the favour by bringing the Buyer's thoughts back to you in a calm factual way.

Confidentiality And Discretion

Confidentiality outside your business and discretion within is crucial to the success of your relationship.

A good Intermediary will be discrete about the sale of your company. Employees will get nervous when they learn your business is for sale. As well customers, competition and outside resources like suppliers and creditors may also react negatively if word gets out you're selling.

Your Intermediary will secure the following from a prospective Buyer:

• Non Disclosure or Confidentiality Agreement outlining their legal responsibilities in having access to your confidential information.
• Buyer Profile stating their background, experience and how it may relate to the purchase and continued successful running of your business.
• Personal Financial Statement demonstrating up front the Buyers' capability to produce the funds necessary to buy your business and their ability to produce efficient working capital to sustain current operations.

Marketing Your Business

A good Intermediary will possess a data base of qualified Buyers and a network of resources to bring additional qualified Buyers to the table. 

Professional Advisors
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As well an Intermediary will have a curated list of professionals on their team to fill in the blanks for any required services your team does not have from valuations, legal, accounting, tax, insurance and wealth management to deal structuring and all the other things that can pop up. 

How do you get from thinking about selling to actually concluding a deal? How do you get the best price/deal (it's not only about price) for your business? How do you find a Buyer? What does the process include? And much more.

COULD THIS BE YOUR LEGACY?
In my experience, within the SMB world, some Owners are definitely looking at buying up their competition in order to grow or to eliminate them altogether. It might be that you are a $3-10 million company within a narrow specialty niche. Your competitors could be 3 or 4 players, also with boomer aged owners, all doing the same amount of business as you or a little less and all wanting to get out.

Bob is 53 years old and his company has sales of $4 million annually. They have remained at this level for the past 10 years mainly because he and his partner were comfortable, made a good living and didn't need the perceived headaches of running a larger company. So little effort was made to grow the company. 

He believes his operations skills are superior to his competitors and he could therefore run their businesses better than they could. His partner Joe is 68 years old and wants out. He is not interested in growing. Bob thinks differently, he has another 10 years or more in him and the idea of going out on a high has gotten him re-energized about his own company. So Bob now has the opportunity to fast forward growth by buying out his partner and his competitors.

Here are the next steps highlights as we have outlined for Bob to create an Exit Plan that will allow him to retire on a high note. Possibly with greater success than he had ever imagined.
​

1. Bob has to first buy out his partner. To do this he needs advice and capital that we will provide.
2. Bob now has 100% of his company and makes decisions as he sees fit. So growing and acquisitions are definitely on the agenda.
3. Before he can think about buying his competition and growing he needs a plan. We will help him develop and execute a plan.
4. He needs to buy out 3 of his key competitors. Two have annual sales of $2 million dollars and one is at $1 million in annual sales. To do this he needs advice and capital that we will provide.
5. Now Bob is running a $9 million company post purchase and likely has some new challenges that come with larger organizations. We will provide him with our team members who possess the skill sets he requires to run and grow the larger company. Bob can run this as a $9 million dollar business or he can choose to grow it further before he exits. He may choose to grow it to $15 or 20 million or more and then sell. It's up to Bob and how much work he is willing to put in.
6. In order to exit successfully Bob will need an Exit Plan. We will develop that plan with him and help execute it. 
7. He will require a buyer(s) and we will identify them. He will also require our team to represent him in the sale.
8. Bob will have now taken a lifetime of experience and grown and sold a company worth significantly more than the company he was running with his partner when we first met. Quite an achievement and a great way to go out on top. Not to forget he will be significantly better financed for his retirement.

Interested in talking about this kind of legacy for you? Contact Us

Sellers tend to prefer Share sales while Buyers lean toward Asset sales. Here are five things to consider when making this quite important decision. Outside Professional services will be required for legal, tax and possibly other questions. Make sure your trusted Advisors have specific business selling experience.

1. Avoiding Liability Issues
In a Share sale, all of the assets and liabilities of the Sellers' business remain with the company. Subject to agreed price adjustments or indemnifications the Seller gets to leave responsibility behind them from any liabilities and the Buyer agrees to take on the responsibilities.

An Asset sale allows the Buyer to carefully select which assets they want to purchase and which liabilities will be assumed. In addition, and by law, the Buyer becomes liable for environmental contamination issues and any union employees.

2. Union and Non-Union Employees 
In an Asset sale, non-union employees do not need to be taken on by the Buyer. To avoid wrongful dismissal claims from the employees, the Seller usually will require a Buyer to offer new contracts to most if not all employees on terms that are similar or identical to their existing contracts including a recognition of prior service.

In a Share sale, the Sellers' employees remain employed by the company, unless a change of ownership triggers rights under the employment agreements of specific employees such as senior executives. Therefore, unless the Seller terminates certain employees and pays severance pay before closing, the Seller retains all of the employees, even those the Buyer doesn't wish to employ.

3. Reduced Level of Complexity
Share sales are usually less complex than Asset sales. An Asset sale will require transfer documentation for all of the assets being transferred including real property, permits, licences, leases, contracts, equipment and vehicles, intellectual property, etc.

By contrast, under a Share sale, all of the assets of the Sellers' business remain with the company. The only required transfer is of the shares of the company itself and possibly an assignment of shareholder loans.

Be aware, an Asset sale may possibly trigger the need to obtain more third party consents to the transfer of the assets. A more time consuming and expensive process than a Share sale, where identifying and dealing with any change of control provisions in contracts, leases, licences and permits would be less of a burden. In addition, certain assets, such as government licences and permits, may not be assignable.

4. Tax Considerations – Share Sale (Please check with your trusted Advisors for tax and other appropriate laws within your own province/state/country.)
The proceeds of a Share sale (above the Seller’s adjusted cost base) are taxed as capital gains, meaning only 50% is included as income.

If certain conditions are met, a $883,384 lifetime capital gains exemption indexed to inflation is available to Canadian residents who sell shares of a qualified small business corporation. This applies to a sale in the year 2020 and could change in the future.

A corporate Seller may be able to reduce its taxable gain by causing their company to pay a non-taxable inter-company dividend from “safe income” (that portion of retained earnings attributable to earnings reported for income tax purposes) before the sale. The purchase price will be reduced accordingly.

A Buyer might prefer a Share transaction in order to take advantage of the Sellers company’s non-capital tax-loss carry forwards (i.e. business losses) that can be applied against future income.

A Share purchase allows a Buyer to avoid paying sales and property transfer taxes on purchased assets. These taxes can be significant – property transfer tax is 1% on the first $200,000 in value of the real estate and 2% thereafter. Sales tax is 7%, although an exemption may be available in respect of certain assets such as production machinery and equipment. (Please check your local and national laws with a professional.)

5. Tax Considerations – Asset Sale (Please check with your trusted Advisors for tax and other appropriate laws within your own province/state/country.)
A Seller will usually desire the purchase price to be allocated to minimize the recapture of capital cost allowance previously deducted on depreciable property.

A Buyer will typically want to allocate as much of the purchase price as possible to depreciable property so that it can ‘step up’ the value of assets to their fair value resulting in higher tax deductions for depreciation expenses in the future.

Lastly, a Buyer will be required to pay property transfer tax on real property and buildings (including permanently affixed equipment) and sales tax on equipment and inventory subject to all available exemptions.

​You need to determine (with appropriate counsel) advantages and disadvantages of Asset vs Share sale for you.

Exercise - Tasks And Questions

Outside Professional services will be required for legal, tax and possibly other questions. Make sure your trusted Advisors have specific business selling experience. Start interviewing current and potential professional services Advisors. Make a list of candidates.

Legal Advisors

Tax Advisors

Other Advisors

Asset Sale Advantages To Me

Asset Sale Disadvantages To Me

Share sale Advantages To Me

Share Sale Disadvantages To Me

Disclaimer: We are not legal or financial advisors and make no claims about the accuracy of our opinions. Please make sure you work with your trusted Advisors to determine tax and legal implications of an Asset vs Share sale in your country.

Seriously, how long are you planning to wait? Or is waiting your plan?

As a boomer age business owner, selling or transitioning your company is likely top of mind. The story you're telling yourself and your trusted advisors may sound like this: "I know I have to do something ... it's so much work...timing isn't right...my children will take over...l have a partner" etc.

Your future, and the well being of many other people, depends on the steps you take over the next few years. You know you need to do something now or it might be too late. Protecting what you have built and positioning for the future are the priorities. The clock is ticking, ready or not.

When it comes to selling your business. If you don't move forward, the decision will be made for you.

Case 1 - Business relies heavily on importing custom product from China. Sales are totally based on travel and tourist industry. I wonder if the recent events will impact this company and its' chances for success in a sale.

Case 2 - Owner never made it to our second meeting. Went from healthy and excited about the future of his transition the first time we met to one week later no longer able to work. Potential sale of the company is not really viable.

Case 3 - Successful small distribution company has afforded the Owner a nice lifestyle. Unfortunately it is too small for anyone to be interested in buying and revolves too much around the Owner. Owners plan is to wait until they're ready to sell and then grow it and remove themselves from a central role. Good luck!

Case 4 - While contemplating the eventual sale of the business over the past several years the Owner is now faced with a government expropriation of his building and business. Unfortunately the government works in mysterious ways and will move ahead when they feel like it and at their convenience. Oh and the government will pay what they think is reasonable for the business. So living and running a business in limbo and no definitive idea of how much the Owner will be compensated or how long it will take.

Health, the economy, competition or industry changes will dictate what happens next. At that point all bets are off. You've lost control and you didn't get into your own business just so you could give up control.

Don't fall into the unrealistic timing trap. It will likely take 3-5 years from start to finish to be fully out of the business. You need to find a buyer, do the deal and then transition. 
Sometimes it can be done in less time if the circumstances require but typically it is a longer term proposition. At this point you don't know and it would be wise to prepare for the worst.

Right now you may not know exactly what you'll do after the business is sold. It's ok, that's part of the journey. You didn't have all the answers when you started or took over the company either.

Likely 80% of your wealth is tied up in your single largest asset - the business. Most owners tend to have inflated opinions on the value of their company. Wouldn't it be more prudent to find out the real story.

Take your first step today and see what your business might be worth. And more importantly find out what you have to do to get it.

Schedule a Call or Meeting

SELLING YOUR BUSINESS?
​Ask yourself these 20 questions. Be completely honest. It's a quick score and an easy way to see how a Buyer will perceive your company. 

By Eric Gilboord A2E

1. Talk To Other Entrepreneurs.  Talk to them about how they started a marketing program. You are not the first person to do this. Others have gone before you and are usually willing to share their experiences. Lessons can be learned and costly mistakes avoided.

2. Don’t Get Overwhelmed.  Acquire a basic understanding of marketing to avoid being overwhelmed and to help reduce the fear and anxiety that occur when you enter an unfamiliar area. Read books on marketing and take marketing courses. Become familiar with marketing terminology and activities.

As an Owner, we have all accumulated new or crazy ideas that have not been implemented. Some came from customer requests, an offhand conversation with an employee or supplier, middle of the night brainstorms and strategic planning sessions you only partially executed.

We all have them, just never could find the time to do anything about them. Tried once, had some success but you weren't comfortable with the amount of work required to fully exploit the idea. So you just left it on the back burner to simmer or worse, get cold.

I guarantee if there was an idea generated and not acted upon, it wouldn't take long to quickly determine if it could have a life. You want to know if there is an ember of possibility or not. Blow on the ember and massive flames can grow out of it. If the idea proves to not be viable then use it as a starting point. One idea typically begets another and another etc.

Are you sitting on other unexploited sales, money left on the table? An opportunity to take your tired business in a different direction.  You could be sitting on a pot of gold. And if you aren't prepared to take the idea to the next step, then pretty it up and use it to sweeten the deal for a prospective Buyer.

Once you dust them off, be careful as you may now want to move forward on some of the ideas and put the sale of your company or the launch of something else on the back burner. My suggestion is to run on parallel paths. Continue preparing for the sale as you never know when the right Buyer will come along or you no longer have the choice about selling. 

Prepare the list, do the best you can and consider handing over the list to the new Buyer. No one will pay you for opportunity they have to execute on. However sweetening the deal is always nice. Or tie the new idea into an opportunity you could run with at a later time. Post transition.

This is a team sport so get your staff, vendors and customers involved. Remember confidentiality is key. So be careful and selective who you let in on the process and don't tell anyone everything. Until the time is right.

Exercise - Task Create An Opportunity List

1. New Product Ideas

2. New Service Ideas

3. Existing Product Improvements

4. Existing Service Improvements

5. Customer Relationship New Ideas

6. Potential Joint Venture Opportunities

7. New Equipment Purchases

8. Existing Equipment Modifications

9. Brainstorm new ideas with select staff, vendors and customers.

Lesson from my online course www.SellYourBusiness4More.com

Timeline Of Events For Selling Your Business
Extraction From Eric Gilboord Online Courses

This is an extremely optimum time frame and would require a very well prepared Seller, highly desirable company, a qualified Buyer and does not include the transition time to ease out of the company post sale. All in count on 3-5 years.

4-6 Weeks Preparation
• 2 Weeks to gather the required information. The Intermediary will work with you to gather necessary information and to gain an understanding of the business (Information gathering is mostly a Seller responsibility.)

• 2 weeks for the Intermediary to compile the necessary Teaser and Confidential Information Memorandum documents (Mostly an Intermediary responsibility.)

• 1-2 weeks to review and finalize representations (Joint responsibility of Seller and Intermediary.)

1-3 Months for Soliciting Interest from Buyers (duration is very variable)
• During this time the Intermediary will mostly be talking with prospects, answering questions, feeding more information to them.

• Much of the effort during this phase is the Intermediary working with prospects, trying to figure out who are serious and who are not, filtering and moving them along. Making sure that only serious, qualified prospective Buyers get to meet and talk with the Seller.

• The Seller may be required to provide ad-hoc ancillary reports. Mostly accounting type data or answer questions.

• The Seller will be required to meet with prospective Buyers (1:1, duration and frequency is variable and will be based on seriousness of Buyer and comfort of the Seller).

Receive a Letter of Intent (LOI) to Proceed
The prospective Buyer will issue a LOI. The Seller will be required to negotiate and accept the LOI terms (Review by Sellers' legal counsel is mandatory. ) The typical LOI would contain terms about the deal, payment schedules, vendor notes and post transaction employment / contracts, but it can have all kinds of terms and considerations that will form the basic terms of the future transaction.
         
Accepting an LOI is certainly a significant go/no go point in the process. The Seller gets to make the final determination at this stage.

2-4 Months Buyer Due Diligence Process (This is a fairly intense period of time )
• The Buyer will provide a list of expected items that they wish to review.

• The Seller will need to work diligently and expeditiously to respond and provide this information in a timely manner. Responses could be piecemeal over a few weeks. This for most sellers is the hardest part of the work required since there could be considerable asks, lots of documents to gather and create and lots of meetings to review and discuss.

• Depending on the answers to the above there could be further requests, conversations and meetings.

• The Intermediary will assist you during this period. But this is largely dependent on the information request, and what role the seller would like the Intermediary to play and what access to information would be provided to the Intermediary.

4-6 Weeks Legal Process (Time required to read & review docs)
• Legal begins once Due Diligence completes and this typically lasts a 4-6 weeks or more. The variability depends on the legal complexity and detailed Seller & Buyer review of clauses and specific wording.
• Emotions will be running high at this point, so patience is required if you really want the deal to close!

Deal Done! Total elapsed time from start to end: 8-12 months but most of the Seller effort was during the Due Diligence phase.

Exercise - Questions

What would be your ideal timeline for starting the process to completely exiting with you having no further involvement with the business?

Is it realistic?

Why is this your ideal timeline?

What about the above timeline do you think does not fit with your personal situation?

Schedule a Call or Meeting

​I was thinking about a question I often get in media interviews. Why are 60+ year old business Owners not getting ready to sell? I used to answer 'they love what they do'. Now I think the more accurate answer is they may be afraid of their imposter syndrome popping out. It's not easy to go from a pretty much know everything about your business person to a know little if anything about selling your business. An imposter. One extreme to the other. Supreme confidence to no confidence. Give or take.

So I am going to suggest that if you're an Owner who wants to quickly get up to speed on selling your business we should talk. Please click here to schedule a call.

​Eric Gilboord

PS One more thing. As entrepreneurs we all tend to feel a little bit like imposters no matter what we have accomplished in our lives. And while building the business we have all been in the 'got a massive order now what do we do seat'. So you should know it's ok.

​Talk soon.

Excerpt from our online program.  ​Sell Your Business 4 More

​You should be working very hard to build your business into something great and make yourself irrelevant in the process.

The strategy is simple:

1. Have a big vision and, make it worthy of your time and effort. And more importantly your staffs time and effort.
 
2. Bring great people with varied skill sets and experiences onboard. Make sure they speak their mind.

3. Let them do what they do best and are most passionate about. We all have a superpower and at our core we know what it is. This is usually accompanied by a deep desire to unleash it to its' fullest potential.  

4. Create a desirable inclusive atmosphere that great people want to be a part of.

If you succeed, they will thrive and likely take the company much further than you ever could on your own.
   
So what should irrelevant mean to you in the context of selling your company? Right now and for the foreseeable future you will maintain the vision and lead the charge. As you are getting ready to transition, slowly replace your superpowers with others who demonstrate the same abilities and let them take over.  

The same applies to any of your key staff who will be leaving around the time of selling or within a few years. Buyers will interview your employees and they will find out who is staying and who is going. Start training their replacements as well.

At some point you will become redundant, irrelevant and unnecessary to managing and growing the business. You will then have succeeded.  

The business operating without you is a key factor when Buyers are considering purchasing your company. It means they can step in and immediately take over.

It's not easy and requires some real grit on your part. While many day to day functional activities are taken care of by staff there are still top level decisions that always seem to fall into your lap. No this is not by fluke it is by design, your design. The desire to be relevant and important to the process.

There is a reason that some of you have kept your business running at a particular sales level for years. It's not always because opportunities have dried up. Nor is it the new developments within your industry. It's because there is a comfort in working in a particular sized business. You found your comfort zone and staying there is well, more comfortable. Typically an Owner will keep a successful business just under $3 million around $2.6 million in annual sales. Or in many cases under $1 million or under $2 million. You've created what is often referred to as lifestyle business. i.e. your lifestyle

I know it sounds counter intuitive since you spent the last few decades making most of the key decisions, creating and massaging the vision, leading the sales and generally driving the business to its' current success.

It won't be easy to give up the responsibilities and let go. But the Owner who has done this typically finds that among the many factors used by Buyers to make a purchase decision, this one is key.

Put yourself in the Buyers seat. You do the transaction and suddenly you get hit by a bus. Or there is a falling out and you refuse to continue the transition relationship. You don't agree with a change they're making and your instinct is to fight it or worse sabotage the change. If the Buyer is dependent upon one or two people to determine the fate of the business post sale, they're highly unlikely to move forward with a purchase.

You can say it won't happen all you want, but when one is dealing with real money and time invested in the success of a venture they want all the right cards in their hand.

So become irrelevant personally, to the point where you become incredibly desirable as a company. 

Exercise - Task

Step 1 is to be clear on your superpowers. 

Step 2 is to determine who the best replacement might be. Look inside your business and outside.

Step 3 is to identify the current staff with other superpowers the company needs to thrive. And their replacements. Because you never know who will leave or when.

My superpowers and replacements are:

1. Power                                                                     Replacement

2. Power                                                                     Replacement

3. Power                                                                     Replacement

4. Power                                                                     Replacement

Other currently existing superpowers within the company and their replacements are:

1. Power                                                                     Replacement

2. Power                                                                     Replacement

3. Power                                                                     Replacement

4. Power                                                                     Replacement

If you found the above information and exercise of value please visit.
Sell Your Business 4 More

Guide/Coach Eric
416-270-2466
eric@ericgilboord.com

I've worked with more than a few family businesses where blood is thicker than contribution. Tends to typically lead to a somewhat depressed staff atmosphere and lower sales/profits. 

My position with Owners is if you really want to maximize the sale of your business, admit what you know to be true and let the family member go. Or change their position. 

They know better than you do how much damage is being done to the organization by their actions or lack of action. You may be surprised when your child or sibling or other relative actually thanks you for ending their misery.

Staff will be relieved and productivity will likely rise.

A2E

Topics Covered

• Much older owners are now looking to get out.
• Next generation may have screwed up.
• Niche vs foreign commodity competition.
• Automation and leading edge technology.
• Innovation comes from established small niche businesses.
• Realizing opportunity currently under your roof.
• Sales and Marketing to go to the next level.
• Sell 70% of your businesses, work with the new owners and enjoy a huge windfall on your remaining 30%.
• Buyers are looking for unsexy below the radar companies.
• Buying platform companies.
• Protecting intergenerational wealth.
• Family businesses, ups and downs.
• Runaway bride.
• Fathers and daughters.
• Selling to your children.
• Families act the same in your business as in your home.
• Entitlement issues.
• Lots of options for Owners to exit.
• Work back from what's in the best interest of the Owner.
• You don't know what you don't know.
• Surround yourself with an experienced team.

7 Sure-Fire Ways to Beat Large Business
by Eric Gilboord from his book 'Just Tell Me More'.

1. Outmaneuver Them.  A small business is like a speedboat that can manoeuvre quickly, slow down or speed up as needed, and turn around completely in a much smaller space than a battleship (a larger business) can. A new strategy may take a large business three months to develop and implement. You could execute it in three days.

2. Offer Genuine Personal Attention.  Small businesses can offer real personal attention, greeting customers by name and having a brief conversation with them when they enter their establishments. Customer service is more than screaming, ‘‘Hello!’’ indiscriminately when someone walks into a store. I find this particular activity, conducted mostly by the larger U.S.- based chain stores, to be somewhat unsettling and in many cases, quite insincere.

3. Choose Between Help And Help Yourself.  I prefer to buy from small businesses because they’re usually more ready, willing, and able to help me. It seems that customers must choose between getting help and helping themselves. The staffs at some larger organizations tend to be busy stocking shelves. They may point out where something is but they don’t always have the time or the expertise to help customers make a purchase.

4. Educate Yourself.  Education can be an important part of the purchasing process. When many products deliver the same benefits, it is not always easy to make the right choice. In order to select the best product or service for your needs, you may require education. Small businesses tend to be better suited at offering assistance and are the best choice for one-time requests or requests for unusual or rare products and services.

5. Tailor Your Products.  A small business has the ability to tailor its product or service selection to its specific customers. The most popular products your specific customer desires can be stocked in depth. This feature can be a disadvantage to large businesses as they carry a wide range of products offering little choice within a specific product group. Don’t forget to promote this advantage. Your business may represent one section of one aisle in a big box store. You don’t need to worry about the rest as you are not in those businesses.

6. Train Your Staff.  Make sure you don’t make the same mistakes that some large businesses make. Don’t fall into the trap of being too busy to provide good service. Unfortunately, several large businesses seem to have staff to stock shelves but not to help customers and in some cases, not even to take your money. I can’t imagine any small business allowing a customer to stand in the middle of the floor with his or her money and no one to give it to.

This unfortunate experience happened to me in one of the well-established department stores. I couldn’t even pay for the one item that I came in to buy. But small businesses don’t always have good service. You must train your staff.

Your larger competitors probably have training programs. Your advantage is the ability to have an informal, on the spot training session for your staff. Augment any formal group training with small amounts of input when needed. If you notice something wrong or there’s a situation where you can improve your service, the changes can be made almost immediately, unlike your larger competitors, who may have to take months to develop a more formal, structured training program.

7. Don’t Compete On Price Alone.  Some small businesses charge a little more than a larger competitor but that’s OK. Some segments of your target group are willing to pay a little more in order to receive better service. It’s up to you to provide it and to make sure that customers know they are receiving added value. Some customers will always look for the lowest price. They will shop around, use your time and expertise, then go to your larger competitors to make the purchase.

It’s your job to recognize these people and to educate them about the advantages of doing business with you. Customers are not mind readers. These ideas apply to many business categories such as retail, manufacturing, and industrial or professional services. No matter what business you are in, act like a speedboat and outmaneuver the battleship. Go out and run circles around big businesses.

You Never Seriously Thought About Selling The Business. Until Now

​Like many of our Clients you may have gone south for the holiday break. You caught up with winter friends. Some sold their businesses a while ago, some sold recently and this is their first "I don't have to go back" season and others are like you, still thinking about it. Until now.

You've been promising your spouse and children that transitioning was just around the corner. Or swearing up and down that you'd die with your boots on. Until now.

Boomer aged business Owners are a breed unto themselves. You've worked hard all your life building a company that has for the most part provided you and your family with a pretty good lifestyle. No complaints and no real regrets. Until now.

Selling the business was never required or even considered for financing vacations, cottages, winter homes, the kids education, some side investments, hobbies and any of the many surprises life throws at us. Until now.

The plan was to, at some point, transition out of the business and take it easier, however you define that. No pressure to prepare the business for sale first or serious thought about how much it would bring on the open market. You heard stories of Sellers getting 6, 7 or 10 X ebitda or auctions to buy your company. Fewer Sellers to compete with and more Buyers every day. It all sounded great. Until now.

The reality now is you need to sell the company to finance your retirement. You have no idea how long you or your spouse will live. Therefore no real way of knowing how much you need. Regardless of what you require, Buyers rarely pay 'what you need', unless the business is worth it. Just kidding. They don't care what you need, they pay what the business is worth. Until now.

Let's do the math. 65% of all established businesses in Canada and the US are owned by Boomers - Owners born between 1946-1964 the oldest boomer Owner is 74 and the youngest is 56. Owners are rapidly backing themselves into a corner. Many businesses never sell. You thought you had plenty of time. You assumed or hoped you would get what the business was worth. Until now.

It was a Sellers market, as many Owners have not started the process or sold yet. To put it into real terms 90-95% have not sold and 80+% don't even have a transition plan for selling their business or a team to help sell it. So to be clear, you were in the driver's seat if you had a well run, solid and profitable business with a big future and a great team running it without your participation. You planned and prepared for transition and a successful sale was in your future. Until now.

While you may be many steps above the other Sellers you may have waited a little too long. Buyers are now taking charge. They know you need to sell because of age, lack of enthusiasm, other interests, no successor etc etc. etc. They also know your fellow boomer aged Owners need to sell. As a Seller, you are running out of runway and have no choice but to take action. Today it has become a Buyers market. They are smart, savvy and experienced Buyers. They know way more about this than you do. Or your long time corporate Lawyer or Accountant who never sold a business. Think trading baseball cards with your older sibling.

Next Step - Get Advice, You Can't Do This Alone

One of the most valuable lessons I've learned from studying successful people is that no matter how famous or how rich they are, somewhere in their lives is a coach, a mentor, or an adviser. Successful people accept they will make mistakes and lots of them. They also seek out help to reduce and overcome the inevitable failures. It's part of the process.

The first thing a new President does is establish their advisory group. This applies to presidents of companies or countries. You can't possibly know what to do in every circumstance, particularly if these are new to you. Smart, successful people surround themselves with even smarter associates. Getting guidance is an important element in your future success. Take the first step and get advice.

From my heart, Eric Gilboord
eric@warrenbdc.com

Eric Gilboord is a lifelong entrepreneur, Author, Public Speaker and the CEO WarrenBDC, a company that  specializes in working with boomer aged business owners or those wishing to acquire their companies.

Eric is focused on solving a big problem. Sixty-five percent of all businesses in Canada and the United States are owned by baby boomers. Anyone born between 1946 and 1964. So this is a pretty big audience. Eighty percent of those owners do not have a plan in place or know how to transition. Most are counting on the sale of their company to fund their retirement, and in a lot of cases the value of the business is less that the owner needs for the desired retirement lifestyle.

In this episode Eric:

• Says Naysayers uninformed opinions are based upon their own life experiences
• Points out that the most important sale a business owner makes (the sale of the business) is the one they are worst prepared for
• Explains how he works with business owners to find unrealised potential
• States that the demand for businesses with predictable cash flow is strong
• Talks about some of the options business owners have when planning to exit
• Notes that after cashing out many entrepreneurs are choosing to buy another business rather than investing in financial markets

Interviewed by Tim Alison

Direct link to interview page: 
http://screwthenaysayers.com/ep-181-the-most-important-sale-any-business-owner-will-make-eric-gilboord/

Also listen to the interview with Eric here:
iTunes: https://apple.co/2LkWSPV
Screw the Naysayers Episode Page: https://screwthenaysayers.com/podcast
Google Play Music: https://bit.ly/2NBgqMv
Spotify: https://spoti.fi/2MF5T6g
Stitcher: https://bit.ly/2uYCsRC
Podbean: https://screwthenaysayers.podbean.com/e/181-Eric-Gilboord/