value in your brand

There is Value in Your Brand

Every year, Forbes releases a list of the world’s most valuable brands for the year. Included companies in this list are: Apple, Disney, Coca-Cola, and others. This list contains the most polished brands, the ones that consumers believe to be the best and have the greatest brand value. Yes, these are large companies but small and middle market companies can learn a lot from these.

First, take a look at the perception of these larger companies. Consider what you immediately think of when you read the company name or see the logo. Does your company have a positive perception in the marketplace? If the answer is no, you need to find a way to change that. Not only is perception a huge factor to your customers and potential customers, but also to businesses that look to make deals with yours and for people who may be interested in purchasing your business. Always remember the impact of your reputation in the marketplace. Are you respected in the community? Do you have great relationships with your client base? Do your clients trust you? Each of these factor into the overall value of your business.

The companies on Forbes’ list are creative and innovative in their respected marketplace. They found a way to differentiate their company from their competitors to stand out. This is another way to boost the value of your company. When buyers are looking for potential target companies for purchase, they are looking for that extra marketable piece that adds value to the transaction. For instance, let’s say a buyer owns a successful website building company and is looking to buy a social media company. Many social media consultants and companies boast the same basic services. However, if one excels at providing SEO services or CRM services – that particular company made itself more valuable then its competitors and is more appealing to buyers.

Are you are looking to exit your business but just now beginning to think about these things? You may have some work to do to create a polished business that will interest sellers. If you are a new business owner looking to retire in 10-20 years, now is the perfect time for you! You should be thinking about the overall value and focus on creating a business that is attractive to potential buyers from day one. It is never too early to start thinking about an exit plan – it will pay off in the long run.

Our team can help you prepare your business for a sale. Reach out for a no-cost consultation with our LBA Haynes Strand Capital Advisors team.

succession planning untimely death

Business Succession Planning: Unexpected Death

While planning for retirement is a fun part of the succession planning discussion, we must also cover the less pleasant subject of planning for an untimely death. Most of this information also applies to a permanent disability as well. According to Forbes, three out of five business owners are left vulnerable to consequences of an unexpected tragedy.

It’s April 30 and a business owner client of mine (Bill) has passed away and his spouse calls me. The spouse (Maria) is in a panic. She has never been active in the software Bill owned. Bill died of a stroke just 3 days prior. Maria just came to the realization that she didn’t know if there was money in the bank for payroll on May 4.

Together, we went through a series of discussions that day. I was able to give her all the contacts Bill and I shared with the law firm and financial planner. I was also able to provide information for his payroll service, banker, and the bookkeeper that worked on Bill’s software company. Bill’s management team shared the same concern. Who would run the company, oversee decision making, and make sure clients did not leave?

Planning for this situation, is a challenge as people do not like planning for these unfortunate events. However, there are a number of basic questions and scenarios to consider now. This will help make the situation easier on your surviving family members and employees.

Questions and Scenarios to Consider
  • Do you have life insurance in place that goes to the business to provide a boost to the company’s cash flow should something happen to you?
    • These funds could be used to hire a CEO or consultant to run the company while things are figured out.
  • Have you thought about what you want to happen to the business if you pass away?
    • If so, have you documented it in writing and shared it with your spouse, advisors, and/or management team?
      • Things like:
        • Would you want the management team to use life insurance to buy shares from your estate and run the business as owners?
        • Do you want to leave the business to your children and have them run it? Or hire a CEO to run it?
        • Should the business be liquidated and sold through an M&A transaction? If so, how do you incentivize the management team to stay during this time?

It is impossible to plan for every scenario a business could go through but it is helpful to consider a few possibilities. It is a business that you have built and no one knows better what you want the next phase to be of your legacy, than you. Begin this process today. Have discussions and documentation to help build a succession plan that stands up to many scenarios but provides flexibility as your life and business grow and change. Let us know if you need help with your business succession planning – set up a no-cost consultation today!

succession plan getting started

Business Succession Planning: Getting Started

The best time to have a succession plan in place is the day you start your business. If you do not already have a succession plan in place, today is the day. While many business owners believe getting started is difficult, it is quite simple. The majority of people think it can wait because it’s too big of a topic to cover. When creating a plan, remember to keep it simple and aim for progress, not perfection.

First, business owners need to consider what would ideally happen under two scenarios, retirement and death. The first is easier to think about for a lot of people, so we’ll start with that one and cover death in another post.

When considering retirement, business owners should think about it at least three to five if not ten to twenty-five years in advance. According to the Department of Labor, it is never too early to start planning for retirement. First, talk with your advisors and family, 3-5 years out. Your team of advisors should include your CPA, Attorney, and Financial Planner.

Conversation Starters for Your Team of Advisors:
  • What is my business worth today?
  • How much money do I need in retirement?
  • What can I do between now and my retirement date to build the business valuation?
  • What do I want to happen with the business when I retire?
    • Am I passing it to the next generation of family?
      • Will it be a gift?
      • Will it be bought with cash or over time?
    • Am I going to sell it?
      • Who are the potential buyers – individual buyers, financial buyers, or strategic buyers?
    • Should I let the management team run it, but I will own it still?
      • Are they capable?
      • What type of incentives do I need to put in place to make this work?
  • What am I going to do in retirement?
    • Am I going to stop working completely?
    • Will I do some consulting or gig-economy type work?

This is the starting point. Of course, there are many subsets of questions that will drive the conversation. Discuss these topics with your family to ensure everyone is aligned about what retirement looks like from a timing and lifestyle perspective. These questions can lead down many different avenues. Your team of advisors will guide you down the path that best fits your goals. Business succession planning is far from one-size-fits-all plan and more like a custom “one-size-fits-one”. Build a plan to satisfy your desires, needs, ambitions, employees, and family.

Not sure if you have the right team of advisors in place to help? Contact us today!

business succession why

Business Succession Planning: Why is it Important?

You may know what business succession planning is but do you know why it’s important?

It’s January 5th and I get a call from a client who wants to sell their business. They had a great holiday break and decided they no longer want to run their business. They do not want to deal with the headaches, stress, and people issues that accompany being a business owner. As their business advisor, I make the following statements and ask a few important questions:

  • Have you met with your financial planner to see if you have enough to retire?
  • Do you know what your business is worth?
  • Your business had a really bad year 2 years ago. Remember, almost all buyers will look back 3 years. This will hurt the value in the sale.
  • Does your executive team know?
  • Have you thought about incentivizing them to stay with the buyer?
  • What are you going to do next?
  • Most buyers of businesses your size, will use a loan to buy the business, and will require you to be out of the business in less than a year.

The list continues during the next few discussions with the client. It’s clear they have not thought of any of these, however they want to sell anyway. During the process, the valuation is lowered by the bad year they had, and a few members of the management team leave as they hear of the sale. The transaction closes after months of trying to sell and going through due diligence with a couple different buyers.

This scenario happens every year. Business succession plans help make sure that if you wake up on January 5 and decide to sell, you have the opportunity to easily answer these questions and many more. Having a plan in place will help you maximize the exit value when the times comes, and also make the process of selling or transitioning much easier for the business.

Contact us for a no-cost consultation to find out if your business is ready to be sold.

succession planning

Business Succession Planning: What is it?

From the day you start your business, you are focused on both present and future growth. However, many people never think of life after the business or succession planning until it’s too late. How do you know it’s too late? Typically, business owners don’t start thinking about this until a major life event occurs, they are burned out and need to sell, or someone comes knocking and wants to acquire their business. According to a Wilmington Trust Survey, 60% of business owners do not have a succession plan in place.

None of the times previously mentioned are the best time to start a succession plan or think about it, as you are under stress. The best time to put together a plan is when you start your business. If you didn’t do it then, the next best time is today!

What exactly is business succession planning? It starts with answering a series of questions with yourself, your family, your executives, and your advisors. The purpose is to make sure what you have built in your business continues on, not just for legacy, but for the people, and families, that you are providing a job to. There are a lot of critical things to think about in a succession plan. It helps you decide what happens to your business if something were to happen to you.

Does it go to management? Does it pass to your estate? Will the business just fold up and close? How is all of this planned both structurally and financially?

A succession plan is an iterative process. Business owners need to pick it up once a year and re-read to say, yes this still fits where I am in my life and where my business is, or it needs changes.

If you are a business owner without a succession plan in place, contact us to schedule a no-cost consultation.

resources

Resources for Small Business News

Are you a small business owner without go-to resources for your business news? It is important to stay on top of industry updates, events, and ideas that may impact your small business. However, we know that running a small business is no easy feat. When you have five extra minutes, you do not want to spend them sifting through news outlets, deciding what is trustworthy and worth reading.

In order to help with this, we are sharing a blog post by Meredith Wood of Fundera. Meredith provides readers with an organized list of resources including websites, blogs, and social media pages to follow. When utilizing this list, business owners will save time and have easy access to helpful advice and information.The list provided includes sources that will share the latest news and updates in capital expenses, loans, budgeting, forecasting, marketing, social media, taxes, HR issues, government standards, etc.

For example, one of our favorite suggestions in the list is New York Times: Entrepreneurship & Your Taxes. The New York Times is common reading material for most people but the particular sections Meredith mentions, we find important. The first one being Entrepreneurship and the second being Your Taxes. Both of these sections highlight subjects like small business tax, healthcare reform, and credit scores.

Click here for the 37 Best Resources For Small Business News

Top 10 Mistakes in Mergers and Acquisitions

The merger and acquisition process can seem daunting to someone who has no experience and isn’t working with a broker. Over the years we have heard a number of horror stories and have compiled the following list of the top 10 mistakes in mergers and acquisitions:

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Buy a business

It’s a Great Time to Buy a Business

As you look to purchase a business make sure you are doing it for the right reasons.  Don’t just say, “I want to get rich.”  That way of thinking probably won’t cut it, unfortunately. You need to make sure you have wisdom, passion, and a solid plan for your new business. Do your due diligence!

There are a number of factors that make this the best time in history to buy:

  • Supply and Demand
  • Capital Availability
  • Larger Companies Are Worth More
  • Strategic Savings

Supply and Demand

As baby boomers exit their companies, there are more sellers and less buyers which makes the selection of businesses to buy better than it has been in the past. Many Capital Advisors that provide buy side searches or sell side representation have access to websites that list companies for sale. This access makes it easy to find the appropriate demographic, niche, and value that buyers are looking for. When a business owner comes to a Capital Advisor for guidance, they receive information on numerous companies interested in selling and have more choices than they would have had in the past.

Capital Availability

Private equity groups, private investors, and banks have more money they want to put to use in the marketplace than ever before. Additionally, interest rates are at historic lows so borrowing capital to buy a business can be done efficiently.

Larger Companies Are Worth More

Acquiring 1 to 3 competitors and building your current company may change the multiple you get on an exit from 4x to 6x of EBITDA. Consider buying a smaller business for 3x the earnings. Later as you combine it with your business and resell the larger business in the future, you may be able to get a rate arbitrage on your purchase. Thus, the same business you bought for more than 3x. Some call this the buy-then-sell strategy.

Strategic Savings

If you own a company and acquire another one in the same industry, you could save 5 to 25 percent on expenses for the combined company. This means you could add more profit and cash flow than the prior owner. There are many expense categories that overlap. When the two companies are combined, you will not have to pay twice.

LBA Haynes Strand Capital Advisors can help you sucessfully buy a business. Contact us for a no-cost consultation!

podcast

Fueling Deals Podcast: Acquisitions

John Bly, CEO of LBA Haynes Strand, is on Corey Kupfer’s Fueling Deals Podcast today sharing his deal-making strategy. “It wasn’t until my fifth acquisition that I ran into trouble. I enjoyed sharing my story and the importance of research with Corey,” describes John. Listen to the full podcast episode by clicking this link!

The Fueling Deals podcast showcases interviews of entrepreneurs and experts who have great stories about deals they have done or failed to do. Corey strives to have guests who are open, honest and authentic. Topics include negotiating, structuring, finding, valuing, closing and integrating deals. In addition, they discuss all the related issues, opportunities, benefits, pitfalls and lessons learned during the process.

John is a dynamic international business consulting speaker. In addition, he is the author of Cracking the Code: An Entrepreneur’s Guide to Growing Your Business Through Mergers and Acquisitions for Pennies on the Dollar. When you’re facing a complex business decision, John helps you determine the best possible outcome. He focuses on developing a strategic plan and works with you to take advantage of opportunities, overcome obstacles, and deliver the best results possible. John’s emphasis on being a proactive business partner empowers him to deliver insightful information and practical advice to circumvent challenges before they arise.

If you want more information on how John can support and guide you through a merger or acquisition, contact us today!

Delegation

Business Owners: Delegation Is The Key To Sustainable Value

Business Owners need to learn how to properly delegate roles in order to create a sustainable business. We have seen instances where business owners, who have worked as an “army of 1”, leave their business or retire and the value of the business leaves as well. If you really want  to make a difference in your employees lives and you want to create a lasting business long after you leave, you must learn the art of delegation!

Delegation is tough for some business owners. It is about empowering others to step up and make decisions on behalf of YOUR business and it is about you TRUSTING those employees to do so. Let me ask you a simple question:  Why did you start your business? Look back to when you were a wide eyed, optimistic entrepreneur. You started your business probably because you had a passion and wanted to make a difference in some kind of capacity. You have now created a successful business, one that has value and one that employs actual people! It has been successful, however you still feel the need to make every decision on your own.

What is your company going to do when you retire? Is it going to continue to run successfully or is it going to run like a ship without a captain?

If you want it to run successfully when you are gone, you must master delegation. Stop wearing every hat in the business and find people who are capable and willing to help your business grow. Find people you can trust to make the right decisions, that work within your value system and your business’ objectives. If you fail at this your business will likely fail soon after you leave.

To learn more, contact our team at LBA Haynes Strand Capital Advisors for your no-cost consultation!

LBA Haynes Strand Launches Capital Advisors Group

We are excited to announce a new division at our firm – LBA Haynes Strand Capital Advisors.

John Bly, Co-Managing Member of LBA Haynes Strand, PLLC, had this to say about the announcement: “Since the firm was established, LBA Haynes Strand has been an active participant in the M&A marketplace. Our firm itself has successfully merged or acquired 11 CPA Firms in 11 years, which has created many new and exciting opportunities for the firm.  Over the past few years our clients have been hiring us to advise on mergers and acquisitions, performing due diligence work and providing advice on the structure of the deal. With our history and given the tidal wave of M&A activity coming over the next 10 years, we felt that this was the perfect time to launch our own Capital Advisors group.”

The new entity will be known as LBA Haynes Strand Capital Advisors, LLC and will be led by Saeed Moghadam. Saeed brings over 17 years of banking experience to the group, as he has enjoyed a successful career working with some of the largest banks in the Charlotte area. Our clients will now benefit from being able to leverage both the CPA knowledge and the Banker knowledge under one roof. LBA Haynes Strand Capital Advisors will offer professional advisory with in house due diligence, providing a seamless experience to our clients. 

New Service Lines under LBA Haynes Strand Capital Advisors include:
  • Capital Raise
  • Buy Side Searches
  • Sell Side Representation
  • Debt Refinance
  • Exit Planning
  • Valuation
  • M&A Advisory

To learn more about our Capital Advisors team and how we can help your business, contact us for your no-cost consultation.

4 Reasons Why Now is a Good Time to Acquire a Company

Are you considering acquisition as a way to begin or expand your business? There are a number of reasons why it is one of the best times to acquire a company:

 1. Supply and Demand

As The Baby Boomers are exiting their companies – there are lots of sellers, but there are not as many buyers as there were 10 years ago – so the selection of businesses is better than in the past.

2. Capital Availability

The Private Equity Groups, Private Investors, and Banks have more money on the sidelines that they want to put to use in the market place than ever before. In addition, interest rates are still at historic lows – so borrowing capital for an acquisition can be done very efficiently.

3. Larger Companies Are Worth More

Acquiring 1 to 3 competitors and building your current company may change the multiple you get on an exit from 4x to 6x of EBITDA. The big difference here is that you may be buying a smaller company for 3x the earnings and later as you combine it with your business and thus resell a larger business in the future, you may be able to get a rate arbitrage on your purchase. Thus, the same business you bought for more than 3x.

4. Strategic Savings

If you already own a company in the given industry and you acquire another one – the savings could be 5-25% on expenses for the combined company. This means you could add more profit and cash flow than the prior owner. There are many different expense categories that would overlap, and when you combine companies you would not have to pay it twice.

M&A Tip: As you look to acquire or buy a business make sure you are doing it for the right reasons. Don’t just say, “I want to get rich.” That line of thinking probably won’t cut it, unfortunately. You need to make sure you have wisdom, passion, and a sound plan for this business. Do your Due Diligence! The timing is right to acquire, it’s just up to you to follow through!

For more information on how LBA Haynes Strand can make your acquisition a successful one, contact our Capital Advisors team!