the end game » owner-managed business

Every Family’s Business by Tom Deans

Michael Oleksak — Tue, 10 May 2011 19:52:42 +0000

Every Family’s Business by Tom Deans

This book is the relating of a colorful conversation between two fictional owners who recently sold their respective businesses who meet on a flight to Barbados to invest their proceeds. One sold his family’s insurance business twelve years after taking it over from his father. The other sold his furniture manufacturing business after years of fighting with his son, daughter and wife.

The book’s best passage: “(Lay out) a process…that keeps the family members in the business focused on the goal of selling the business at some point–selling the business at the highest price to the highest bidder, giving preference to cash and without prejudice to whether the buyer is family or an unrelated third party. The stock of the business must always be understood to be for sale. Sale of the stock takes primacy over any consideration of family employment. And family employment will not alter or distort the value assigned to the stock.”

Putting the business first. Brilliant.

A Different Approach – for Owners

Michael Oleksak — Thu, 26 Aug 2010 14:24:21 +0000

Many owners are so involved in every aspect of their business that they are actually doing their business a disservice. The reason is that a business that is dependent upon the business owner to function is not worth as much to a buyer as a business that is built to stand on its own. And it’s too bad because it is absolutely possible to make the shift and create a business that will survive without the founder and have significant value.

More than a Job – for Owners

Michael Oleksak — Thu, 26 Aug 2010 14:22:05 +0000

While attending an AM&AA conference last month in Chicago, I overheard an investment banker in the middle market saying, “I don’t like to work with business owners over, say, 58 years old. They generally have an attitude that their business is their job, their life, and if thinking about an exit, it’s a very slow process to move forward.” For those of you who work with business owners in this stage of life, this may sound familiar.

It’s actually not that different from another comment from an Exit Planning Exchange breakfast in Boston a few years back by long-time consultant and Babson College professor Les Charm: “If the owner doesn’t know what they’re going to do on the Monday after the deal if closed, he or she will drag their feet and find every reason not to do the deal.” Well, why is that?

The reason is that most business owners are so completely immersed in their business that it is simply all they know. Years of dedication and devotion have made some closer to their business than their families while others see their business as their identity. To have a successful exit, owners need to decide and plan for the next activity that will be as absorbing to them as their business has been.

Add to these facts that cash is tight, prospects are unclear for the economy, technology continues to change how we do business, and threats feel omnipresent, it’s not surprising the older generation of owners are delaying their exit planning. But, they are selling themselves (and their businesses) short.

Commercial Bankers Must Know the Owner/Manager’s Exit Plan

Michael Oleksak — Sun, 13 Jun 2010 15:36:24 +0000

The Commercial Lending Review published my article, “Commercial Bankers Must Know the Owner/Manager’s Exit Plan” – April 2010 Mike Oleksak

Getting Ready to Sell in 2012+

Michael Oleksak — Wed, 12 May 2010 20:23:13 +0000

At the March 2010 Exit Planning Exchange (XPX) Summit, the lunchtime keynote speaker was investment banker and author Rob Slee. Rob is something of a visionary. He has intriguing ideas about new business models, insight into the changes that have shaped business today and how our competitive market has become “U.S. against the world”.

In his presentation to XPX, Rob described what he calls the “U.S. Ten Year Transfer Cycle” and explains why this transfer cycle is so important to business owners. Rob points out that in the past three decades (the 80′s, 90′s and whatever we end up calling the first decade of this century), we have experienced a very similar economic pattern that seems to be moving in a ten year cycle. This cycle accounts for our most recent recession that began in 2008 and, hopefully, we seem to slowly be escaping.

This means that the current market is primed for buyers and will remain a ‘buyers’ market’ until 2012. Around that point, financing should flow again from banks to potential buyers, generating higher prices for companies and resulting in more of a seller’s market. Of course there are no guarantees, but assuming this is the case how should business owners prepare?

Why I Hate New Year’s Resolutions – A Different Approach

Michael Oleksak — Tue, 08 Dec 2009 01:56:47 +0000

Not sure exactly what New Year’s resolution to pick for your business or a client’s business? It certainly isn’t as easy as doing a quick self- inventory and realizing that you are 20 pounds overweight — self-improvement resolutions seem to be easier to spot. Here’s a list of suggestions to consider. This list comes courtesy of Jan B. King, author of Business Plans to Game Plans:

Make sure you have a business plan.

Resolve to continuously promote your business.

Set up action plans for your employees.

Survey everyone. (We love this idea and call it Strategic Conversations)

Make sure you are measuring the important things in your business.

Review your business performance measures.

Make a resolution to celebrate when you’ve accomplished a set goal. You and your team will take pride in achievement and can get started on the next target.

Industry snapshot: Smarter M & A

trekco — Fri, 20 Nov 2009 23:03:14 +0000

Here’s a simple example of how powerful intangible capital can be. In an industry meeting, we recently asked a panel how they could leverage their intangible capital (human, structural, relationship) as they moved into international markets. Bill Glavin, President and CEO of Babson Capital (a MassMutual member company), stepped right up. He cited Babson’s acquisition last year of Duke Street Capital in London. He explained that Babson had market and deal knowledge (structural capital) that could leverage Duke Street’s relationship capital in the UK and European leveraged loan markets. Glavin reported that this combination of IC has led to explosive growth in their European portfolio.

We find the language and the structure of intangible capital to be very helpful in thinking about today’s business challenges. In this example, it is the non-financial assets of this financial company that generate revenues, build a sustainable business, and create lasting value. Their human capital builds on their base of market and deal knowledge through creative and disciplined thinking. This knowledge gets recorded and converted to structural capital so that it can be shared and leveraged across new staff and new markets. Relationship capital is where value gets monetized. It is also a source for new ideas and innovation.

The power of the intangible capital concept is in using it to identify and assess the strength of your value creation process today and your ability to improve it tomorrow.

Taking a Fresh Look at Your Job

trekco — Fri, 20 Nov 2009 21:02:37 +0000

How can you become more efficient and effective in how you spend your time as a CEO/business owner? There is a drill we normally use as a step in exit planning strategies, but also can be used to increase the success and value of a business by taking a fresh look at the CEO/business owner’s job.

Here’s how it works. Look at your job in three distinct ways:

Roles: What are your daily activities inside the business?
Relationships: How and with whom do you interact?
Knowledge: What special knowledge do you have about your business, customers and market?

Once compiled, we analyze how the roles, relationships and knowledge can and/or should be shared with subordinates. This self-analysis will help to highlight the more important value-building activities on which the CEO/Business Owner should focus, identify the low-return activities that can be handled by others within the organization, and develop a more robust senior layer of management.

For a more detailed description of this type of succession planning, see “Can Your Company Survive and Thrive Without You?”

- Michael Oleksak 2005

Why Do Owner-Managed Businesses Need Strategic Planning?

trekco — Tue, 10 Nov 2009 21:15:06 +0000

The term strategic planning carries with it the air of big binders and large corporations with big budgets. But the truth is that strategic planning (and action) are even more important in middle market companies with more limited resources—you need to work smarter, faster and cheaper than the giants.

How do you work this effectively? You do your homework. You know where you are going. You keep your perspective. You lift your head periodically and look to the horizon. You are constantly learning. You don’t spend money unless it is going to help you make progress toward your goal.

To us, that’s strategic planning. By our definition, strategy formation involves getting fresh information and identifying the highest value intersection between your strengths and the market’s needs. Planning means thinking through the steps you need to take, what resources you’ll need and how to measure your progress. Planning also implies a disciplined process, to make sure that new information and lessons you learn contribute to fine-tuning or wholesale change in your plans as needed.

Forget the big binder. Think smarter, faster, cheaper.