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Saturday, May 3, 2014

The Final Frontier

We are embarking on the greatest business revolution in 4 generations. It affects our whole economy.

The biggest change in ownership since WWII is starting now and will continue through the next 15 years. More than one half of small and medium business in the American economy are owned and managed by Boomers, and will have a forced change of ownership.

Who are they? Many current business owners have their personal fortunes, the scorecard of their careers, tied up in their businesses. They must find a way to get the money out of the business or assure its continuing viability, or have an unsuccessful retirement.

Do you know business owners in this situation – can’t figure how to get their money out? What do they need? Owners are looking for credible solutions.

We find that the keys to past success are usually the owner’s point-of-view and the culture of the company. We have found that outside solutions seldom work, they aren’t credible to the people doing the work, and they often have never worked elsewhere.

How do you begin creating a solution to a new problem? You should probably start with a common definition of what you have and what you want. Just defining those two often shows available solutions that were previously ignored.

We worked with owners of a technology distributor who wanted to sell the assets of the organization, had a figure from a recent audit, and hoped for a quick sale around that figure. We talked with them about what are the assets? In addition to office equipment and inventory – what else -  entity and name, customer records, sales process, industry knowledge?

Asked what they wanted, the owners said quick sale at top dollar. Which is primary – speed or price?

As our conversation expanded, the owners defined what they were selling (the complete entity, but retaining another separate corporation), had identified potential buyers (their knowledge of the industry could be useful to the buyer for transition), and that a couple of years was OK to get a better price.

Just getting the conversations and revelations took 90 days.

For a nonprofit teetering on the knife-edge of solvency, the conversation lead to determining a merger was a desirable choice strengthen the organization and keep the mission programs operating, then find partners, complete the combination of the two entities. The entire process took almost 3-years.

A contractor got 100% of their revenue from government contracts when we began the conversation about getting money out for the owners. What do you have, what do you want? The results over an 8-year period was to increase government revenue threefold, reduce government contracts to less than 30% of total billing, and to sell the organization for several multiples of its initial value.

A successful future begins with a conversation.

Rules of the road? Click: Selling Out 

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