money matters - preparing for company sale - 041113

Money Matters:

Preparing Your Company for Sale

J. Craig DickensPrincipal

OneAccord Partners.www.oneaccordpartners.com

Craig.Dickens@oneaccordpartners.comt253-303-3894

Frank Coker, MBA, CMCCEOCoreConnex, Inc.www.corelytics.comfrank@corelytics.com425-454-5006

AgendaPreparing Your Company for Sale• The big picture• When do you start?• What’s important?• Who are the players?• Dashboarding• 5 keys to M&A success• InfoComm resources

The Market

• Baby Boomers will sell 9.5 million businesses nationwide in the next 10 years.

• $10 trillion in wealth will transfer during that time.

• Only 2/10 lower middle market companies will have a “successful M&A event”.

• 30% will go to liquidation due to lack of succession planning

Do you have a plan?

• Hope is not a plan - commit to working ON your business (vs. FOR or IN your business).

• Most business owners fail to create value beyond the cost of capital (lifestyle).

• 75% of businesses start preparation at the “last minute”

Are you Sellable?

1. Financial Performance

2. Growth Potential

3. The Switzerland Structure

4. The Valuation Teeter Totter

5. The Hierarchy of Recurring

6. Revenue

7. The Monopoly Control

8. Customer Satisfaction

9. Hub & Spoke

Financial Performance

Your Score?

Buyers care about 2 things:

a. How much profit will your company generate in the future.

b. How reliable are those estimates.

Predictable and consistent margins and earnings

increases your companies value

Predictability

Which would you pay more for?

Growth Potential

Your Score?

What is your industry, segment, and company’s

growth prospects?

How do you compare?

What is your mindset towards growth?

Increasing growth rate and scalability makes your

company more valuable.

Switzerland Score

(Customer Diversity)

Your Score?

Do you have a diverse customer base and multiple streams of revenue?

Product SalesIntegrationServicesConsultingRental & StagingTime and Materials workOther

The more boxes you can check the more valuable you will be?

The Valuation Teeter Totter

Your Score?

What are your gross margins and how do you get paid? (Cash flow, payment cycles and

inventory demands)

Increasing margin and mix of business as well as

decreasing cash needs increases value.

Hierarchy of Recurring Revenue

Your Score?

The Hierarchy

6. Consumables: toothpaste

5. Sunk $ consumables: toner.

4. Subscription: magazine.

3. Sunk $ subscriptions: Bloomberg

2. Auto renewal subscription: Iron Mountain

1. Long term contracts: iPhone

Move toward more reliable and recurring revenue streams to

become more valuable.

Monopoly Control

Your Score?

What is the exclusivity of your business with your customers?

Any Barriers to entry?

Only game in town, differentiated offering, secret sauce or IP makes you more

valuable.

Customer SatisfactionNet Promoter Score

Your Score?

“Based on your most recent experience, how likely is it

that you would recommend My AV Company to a friend

or colleague?”

Satisfied “promoter” customers make your company more valuable (“like”, tweet etc.)

Hub & Spoke

Your Score?

The “If you got hit by a bus” test?

Businesses that are not reliant on their owners are inherently

more valuable.

Want to be more valuable?Make what you do:

• Teachable• Valuable• Repeatable

Preparation Punch List

• Your team (advisor, attorney, broker)• Your plan for succession & transition• Your business plan• Financial statements • Growth charts and forecasts• Employee agreements• Cap table (ownership %’s) - governance• Standards, processes, procedures, price lists• Key customers & suppliers, contracts, volumes• Revenue breakdown – recurring / one-time• Sales pipeline• Marketing program and statistics• Incentive payment history

What are Your Trends

• Growth• Margins• Working Capital• LOB Performance• ROI• Asset Performance• Staff Contribution

Corelytics Dashboard

•Trends•Goals•Comparison •Forecasts•Metrics•Contribution

Dive Deep – Dive Quickly

• Focus on gaps between plan and actual• Get the team to solve and close gaps

Monitor Problem Areas

Review With Team Monthly

Get an Advisor (Coach)

Recommended role:• Facilitate monthly review process

• Build structure and process

• Keep focus on priority issues and opportunities

• Help solve specific problems

• Support accountability

AV Industry Trendsat http://www.corelytics.com/InfoComm

InfoComm Exclusive Benefits:

No-charge dashboard consultation• Email: support@corelytics.com• Subject: Free Advisor

No-charge M&A consultation• Email: support@corelytics.com• Subject: M&A Planning

For More Informationhttps://infocomm.corelytics.com

Thank You!

https://infocomm.corelytics.com

Contact Frank at – frank@corelytics.com