If you’ve successfully “survived” the recent recession, this video may help…

http://video.foxbusiness.com/v/952724040001/how-to-sell-your-business/?playlist_id=87185

Video Series Launched for Business Sellers

Houston, TX, May 25, 2010 — Eric R. Voth, Business Transaction Consultant, today launched “Gearing Up to Sell Your Company,” a 20-segment on-line video series for business owners thinking of selling their companies. The series, available at no cost, is geared toward educating mid-market and small business owners.

The videos feature a wide array of topics on top concerns that owners may have as they contemplate selling their companies. Tips guiding an owner through the selling process are also included. Running time for each segment is 4 to 7 minutes.

“During the next few years, tens of thousands of baby boomers will seek to liquidate their privately owned companies in what may be remembered as ‘The Great Business Sell-Off of 2010 and Beyond,’” says Voth. “What we’re seeing is a massive shift between Baby Boomers and Generation X,” he added. “But tight credit, combined with a glut of businesses for sale, make it a buyer’s market.”

Competition for buyers means business owners seeking to sell will need to know how to properly position their companies to attract the attention of larger companies and private equity firms.

“The key to a successful business sale is knowledge, plus a well-thought-out exit plan,” says Voth.

“When planning to sell, an owner’s best strategy for avoiding any pitfalls is to acquire the proper knowledge — and to exercise diligent preparation. My videos provide educational information about how to sell a company in the least amount of time, for the most money, while maintaining confidentiality throughout the entire process,” he concluded.

The series is part of Voth’s effort to be a valued consultant that provides important tools to support business owners prior to listing their companies for sale.
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Access to the “Gearing Up to Sell Your Company” video series is available at no cost by registering at http://www.ericrvoth.com/
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ABOUT ERIC R. VOTH: (http://ervoth.com/) Eric R. Voth is a consultant, serial entrepreneur, private investor, and author. He is not a Business Broker. Rather, Voth is a Business Transaction Consultant who helps company owners gear up to sell their businesses. Then he assists them with the selection of an appropriate, qualified, professional — a Business Broker, a Merger and Acquisition (M&A) Intermediary, or an Investment Banker — who will serve as their advocate during the selling process. These other professionals handle the actual sale. The scope of his consulting practice is nationwide. It encompasses all business sectors and all SIC codes.

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Media contact:
Eric R. Voth, Consultant, ERV Productions, Inc.
Phone 281-852-4707, Email: erv@xyz-ideas.com

It contains some very enlightening information…
• Over 92 percent of family business owners pursuing a sale reported that no family member is able to take over.
• Inaccurate or outdated business valuations can make it more difficult to determine if a proposed sale will yield a fair price.
• Nearly 95 percent of business owners reported that getting the best price remains a central concern.

For more information on the report, check out this link to Private Equity Professional Digest:

http://www.pepdigest.com/index.php?option=com_content&view=article&id=3533:rothstein-kass-family-owned-businesses-need-private-equity&catid=34:news-to-know&Itemid=24

Signs of life emerging

I’ve been saying it for a couple of months now, and lately a few other voices have joined the chorus: The time to sell/buy a small business is now or is coming very soon. Take advantage of the improving conditions by making sure your small business is in top form.

The following item appears this week in Bloomberg’s Business Week, involving an interview by Karen Klein with mergers and acquisitions specialist Bill Roman:

There are eager buyers for small and midsized companies whose owners have powered through the recession and expect to see demand rebound this year. That’s according to Bill Roman, the managing director of the Boston office of Harris Williams, which advises middle-market companies on mergers and acquisitions and focuses on sales in the $25 million-to-$1 billion range. While business sales fell dramatically in 2009, Roman says Harris Williams is seeing deals pick up in 2010. With few business assets in supply and high buyer demand, valuations for high-quality companies have held surprisingly steady, he tells Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.

From a Q&A:

Is there anything specific that a business owner can do to improve a company’s valuation?

A lot of what’s required is outside the entrepreneur’s control. The biggest driver of whether you’re going to be able to sell your business is your sales growth. You can try to improve that through marketing. And you can assess what your order book looks like and whether your quotations are up. An early indicator of a good valuation is your quote rate trending up, compared to prior sales periods.

Is there pent-up demand for new mergers and acquisitions?

Absolutely—both from strategic or corporate acquirers and from financial buyers. So many business owners are sitting on the sidelines because their business has softened. The corporate development people at the large corporations augment their organic growth with acquisitions, but they haven’t been able to find quality companies recently.

The above information gives you some of the why on selling your privately owned company as the economy starts to recover from the Great Recession. I offer the how in my book, How to Sell Your Privately Owned Company: A Basic Guide for Independent Business Owners – Baby Boomer’s Edition.

I’ve seen economies cycle through boom and bust periods, and chances are you have too. The time to act is in the beginning of the boom, not at the tail end as it runs out of gas. That’s why it’s important to start now.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

FSBO might work when selling a house, but selling a business needs the help of seasoned professionals.

When selling your business, keep in mind the old adage, “A doctor who performs surgery on himself has a fool for a patient.”

In the long run, any investment you make in a selling team will lead to a greater payoff in the end.

Here’s who needs to be on your team:

•  business broker or intermediary who’ll be your chief seller’s advocate

• an accountant with a track record in mergers and acquisitions

• a business transaction attorney with experience in the M&A arena.

You may also want a wealth manager to guide you about investments following the sale.

It’s the broker’s job to set the agenda and coordinate the work of the team.

He’ll probably also recommend engaging a third party business valuation specialist.

And if real estate or machinery or equipment is involved, third party appraisers will be needed to establish the current values of these assets.

In addition to coordinating the work of others, it’s the broker’s job to devise a marketing plan to sell your company for the best possible price and terms.

Your job throughout this process is to continue what you do best … operate your business.

Limit the “do it yourself” projects to those that you do well because of your experience.

It’s a good bet that selling a business is probably NOT one of them.

In the long run, any investment you make in the services of a professional selling team will lead you to a greater payoff in the end.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

Minnesota Historical Society / The 1886 log jam in the Dalles of the St. Croix River.

After crunching the numbers, WYCC found that the logjam appears to have finally broken up in the fourth quarter of 2009. Credit remains tight, which continues to dampen business, but deals are happening:

After starting out as one of the worst economic and M&A environments in recent memory, 2009 finished on a positive note with deal activity and transaction multiples extending their surge from Q3 ’09. Deal activity jumped 90% from Q3 ’09 for disclosed middle market transactions (Enterprise Value < $500 million and > $10 million). Pent up demand and improving economic dynamics appear to be driving the resurgence in M&A activity. Despite slowly improving credit markets, future deal volume growth will be limited due to an overall lack of financing and depressed 2009 earnings. Transaction multiples for Q4 ’09 increased to 6.1x enterprise value to EBITDA compared to 5.8x for all of 2009 reflecting improving credit availability and buyers becoming more aggressive in the market. We anticipate improved deal volume for transactions greater than $10 million EBITDA will be offset by continued stagnancyin smaller transactions where financing is still extremely limited.

Middle market disclosed transactions (Enterprise Value< $500 million and > $10 million) increased 90% in Q4 ’09 from Q3 ’09. In addition, the total number of all M&A transactions increased 24% in Q4 ’09 after increase 23% in the third quarter. Transactions in which value metrics are not disclosed (predominately smaller transactions within the middle-market) rose 22% in the fourth quarter reinforcing that M&A activity reached bottom in Q2 ’09.

For 2010, we believe that multiples will gradually improve as the credit markets continue to slowly unfreeze for middle market transactions and overall economic conditions maintain a positive trend towards recovery.

In summary, the conditions for M&A transactions have improved dramatically in recent months. If you’ve been thinking about selling your small business, this is a good time (or soon will be) to act.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

Her experience in developing a core group (or even an individual) to carry on the work you began is a good example of how to prepare your company for sale even if you’re years away from selling.

She writes: “If you are passionate about the work you do, you need to build into others and help them develop their abilities. It’s the only way to ensure that what you’ve started continues.”

The example she gives for her posting is a home-schooling cooperative, but that mind set – making sure someone is there to carry on – applies to anything you might be passionate about, especially if it’s a business you have built and nurtured over many years.

My book, How to Sell Your Privately Owned Company, makes a few salient points about having a succession plan:

Ultimately you should have a well-defined succession plan in place that you share with family members, partners and possibly key employees.

For many business owners the best plan is one in which they sell their business and agree to stay on and run it for a set number of years. This allows them to take a significant amount of cash off the table, meet the needs of their estate and protect their family and their personal retirement. By selling the business early and agreeing to stay on and work for at least another five years, they put their exit strategy in place and while they are alive, well and healthy they can make sound business decisions.

People who plan are generally more successful than those who don’t. Waiting till the last minute to sell your business is not a plan; it is an act of desperation.

Whether you have a favorite potential successor, or someone you want to mind the shop after you sell, you need to have a succession plan in place and you need to groom your successor.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

* Mountain State University, a not-for-profit private university in West Virginia, was formerly known as Beckley College. MSU has rapidly grown in the last two decades from a two-year college to a university that offers bachelor’s, master’s and doctoral degrees.

But not everyone is waiting for the all-clear sign to jump back into the water.

Medill Reports Chicago, an extension of Northwestern University’s Medill School of Journalism, tells the story of Shirley Evans-Wofford, the owner of Lambent Risk Management Services Inc., a firm that is taking the plunge into two acquisitions worth a combined $10 million (using bank financing!):

Evans-Wofford, 61, the founder of Lambent, is excited. The impending acquisition of a brokerage firm and a third-party insurance administrator will add eight new employees to her payroll and help her boost revenues by approximately 60 percent.

Even in the midst of the recession, Evans-Wofford’s business rose 13 percent to $1.7 million in 2009. “To see it grow from its infancy state up to now is such a joy,” Evans-Wofford says.

Lambent, which began nine years ago in a small office with three clients, now has about 200 clients and operates out of a plush 6,700-square-feet office on La Salle Street in the heart of downtown Chicago.

So why does a risk-management expert, of all people, think this is a good time to go on a buying spree? What does she know about the market conditions that others don’t?

Evans-Wofford noticed that clients were spending less on insurance as they cut costs in the economic downturn.

She told Medill:

“It’s not so much that we are not getting new clients but their premiums are being reduced significantly. You have to do a double whammy by bringing more clients.”

This is where, she thinks, her acquisitions fit right into her current strategy. “There is no [other] way I can make the dollars that I want to make right now between now and five years,” she adds.

In 2009 she signed up for a Chicago program known as nextOne, which  conducts workshops and classes, some in association with the Kellogg School of Management of  Northwestern University.

Michael Johnson, director of the nextOne program, says that this is an opportune time for Lambent to make the acquisitions. “The disruption in the economy is a time that brings up opportunity. It is absolutely an excellent time for her to consider it,” he adds.

In other words, she’s buying now because she believes those two companies are good fits for her own company and they add value to her business.

These two firms were attractive to this particular buyers, and $10 million (or even half of that) is nothing to sneeze at.

And because they made themselves attractive to Evans-Wofford, those businesses will continue to thrive as part of a larger organization.

My book, How to Sell Your Privately Owned Company, spells out how to make your company attractive to the right buyer.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

The matter of confidentiality is something that should NOT be taken lightly –especially on an in-house basis – when it comes to people you interact with on a regular basis.

World War II poster

At this level, you need to keep mum on your decision to sell until the deal is closed.

During World War II there was a saying that “loose lips sink ships.”

When selling a company, loose lips may very possibly torpedo your ability to get the most money for your company, because it can have an adverse effect on your operations, on your sales, and on your profitability.

Think about the various people you have relationships with, and how they’d react if they knew your business was for sale.

These folks are:

• Your employees.

• Your suppliers and vendors.

• Your customers.

• And, your competitors.

Your workforce will start wondering about job security, which could affect how they deal with customers.

Vendors can also get nervous. They may alter their terms and start demanding cash on delivery.

Customers can lose confidence and go elsewhere.

And what do you suppose your competitors will do if they find out that your company’s for sale?

Until the deal is closed, there are only three people who need to know about your decision to sell.

• No. 1 is your attorney.

• No. 2 is your outside accountant.

• No. 3 is your broker or merger & acquisition intermediary.

When dealing with anyone else, remember the old adage:

“Loose lips sink ships.”

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

“How much can I get for my company … what’s it worth?”

In reality, you must be ready to sell for a price that the market is prepared to pay … because the market sets the price.

Book value, which is the amount of assets on a balance sheet, is not a true reflection of a company’s worth.

Selling value IS based on recent results, growth opportunities,

and overall company quality.

Some other value drivers are:

• historical profits

• good books and records that are defendable

• reputation

• location

• employee tenure.

Here’s why good books and records are important…

Most businesses are sold based on what’s called a multiple of earnings.

Earnings are really profits.

In smaller companies, earnings are sometimes called Discretionary Cash Flow… or the letters D-C-F.

D-C-F is the TOTAL of economic benefits to owners before taxes.

Discretionary earnings are calculated by taking the Net Profit on a financial statement, then adding back the dollar value of certain items.

Some of them include adjusted Officers’ Salaries, Interest, Depreciation and Amortization.

Others are nonrecurring expenses, plus ownership perks.

These are items that are NOT absolutely essential for the operation of the business.

They’re expenses that a new owner may or may not be faced with.

So, when trying to determine what you can get for your company, keep in mind that it’s probably worth some multiple of earnings or a multiple of owner’s Discretionary Cash Flow.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.