Important Things Take Time

By Wayne Slavitt - Certified Exit Planning Advisor | Author | Keynote Speaker

In so many ways, we live in a world of constant feedback and instant results. The ability to find out virtually anything we need to know at the tips of our fingers has altered our perspective to expect a quick resolution to most problems. For example, with a YouTube video available for most any issue, we now can tackle most DIY projects with the skill of a professional handyperson. And while immediate resolution of a plugged drainpipe or a cracked windshield is so rewarding, such rapid solutions are unrealistic when tackling bigger issues, such as a serious health matter or a fundamental relationship concern. Important things take time.

As a Certified Exit Planning Advisor, I tell every client that the process of properly preparing for the sale of a business ranks right up there with the most consequential issues they will ever face. For nearly every company owner, the sale of their business represents the highest dollar value liquidity event of their lifetime. Doing it right the first time has a direct impact on proceeds and happiness. Alternatively, failing to properly plan for the sale of the business almost always results in a negative adjustment to price and terms from what the owner anticipated. Important things take time.

I sign each copy of my book, Run It Like You’ll Sell It, with the words, “Start Today!”, because waiting until tomorrow to begin the process of preparing for the sale of your business gives you one less day to get it right. (Have I mentioned that important things take time?)

In preparing a company for its eventual sale, our overriding goal is to maximize the value of the business. And to achieve this objective, we focus on two overall areas: Growing earnings and reducing business risk. Mathematically, increasing EBITDA alone will grow the value of your company. Concurrently reducing business risk will increase the EBITDA multiple, yielding a compound impact on what your company is worth, or what I refer to as “turbocharging”.

It is important to realize that these measures to maximize business value do not happen overnight. Done right, it takes years. And the more time you can allocate to growing EBITDA and reducing business risk, the greater impact you will have. Important things take time.

Let me offer some real-world examples of maximizing business value. Our proprietary Business Risk Assessment tool studies over 22 areas of the company and asks 145 questions, with the goal of identifying business risk aspects that will likely cause negative issues in due diligence. Being able to proactively identify, reduce, and hopefully eliminate business risk early on improves the ability to predict future earnings, allowing a buyer to pay more for the business. A common example of business risk involves the oversized role that the owner plays in the business, involved in all meetings, negotiations and decisions of the company. How will a buyer assess this? Most likely not favorably. Depending so much on the efforts of the same person a buyer is going to hand over millions of dollars to at the closing does not bode well for the future success of the business.

Rectifying this is not usually an easy task. The first step is to identify an internal candidate to eventually take over the day-to-day responsibilities of the owner. If we are lucky, that candidate is evident and ready to step up. Often, this transition is not successful or takes longer than anticipated. Many times, we must recruit a suitable candidate from outside the company, a strategy rife with issues, including knowing little about the person, the ability to synchronize cultural issues, etc. Each start and stop takes time and threatens to delay reducing the importance of the owner.?

Another example of business risk is customer concentration, which could take a few business cycles to rectify. Subjecting the company’s financial statements to a review or audit can not only be costly but may require significant changes to accounting policies and staffing to ensure compliance with GAAP.

For any cures to business risk, time is the critical currency: Important things take time.

Unfortunately, you really don’t have an unlimited amount of time to get ready for the sale of your company. According to the Exit Planning Institute, “it’s widely thought that roughly 50 percent of all business exits are involuntary and instead pre-empted by dramatic external factors.” In spite of your best-laid plans, life will likely get in your way and speed up your need to exit.?

In the exit planning environment, we often talk about the 5 D’s, namely “Death, Divorce, Disability, Distress and Disagreement” that will accelerate your need to exit. The real problem is that you cannot easily predict when one of the 5 D’s will occur. I don’t want to be morbid, but people unexpectedly die every day. A spouse decides the marriage is over and wants out. Life happens. Knowing you have about a 50/50 chance that one of the 5 D’s will happen, planning for your eventual exit becomes even more necessary.?

As the famous Fleetwood Mac song says, “Don’t stop thinking about tomorrow. Don’t stop, it’ll soon be here.”

Start today! Important things take time.?

About the Author, Wayne Slavitt:

Wayne Slavitt is an expert in maximizing business value. Over the past 40-plus years, Wayne has been involved in numerous and diverse entrepreneurial projects in both principal and advisory capacities. Wayne’s broad involvement on both sides of the aisle ranges from executive positions as CEO, CFO, and corporate controller, to consultative roles as an investment banker, specialized business professional, and company founder.

Wayne has extensive public speaking experience, having been a frequent lecturer for Vistage and its predecessor company, The Executive Committee, as well as the keynote speaker at the ECRM Conference and a featured lecturer at Medtrade. Wayne’s new book, ”Run It Like You’ll Sell It:?Adopting the Seller’s Mindset to Maximize the Value of Your Business” instructs business owners and their trusted advisors on how to properly prepare for an eventual sale of a company to achieve peak results.

Through his consulting company, The PrimeMark Group, Wayne provides exit planning consulting services to successful companies with revenues of $5 million to $100 million in a variety of industries.

For media, appearances, and booking Wayne Slavitt to speak at your next event or join as a guest on your Podcast/ Radio Show - Contact Shelly Harrison - Luminary Leaders: Direct 909.519.3712 - [email protected] - luminaryspeakers.com