A 63-year-old woman said to author and valuation expert Tim McDaniel, "I need to sell my business for $2.5 million to support my country club lifestyle." The reality was that her business was worth less than $1 million. How could she have been so wrong? What was the long-term impact of her misinformation? In a flash, McDaniel realized that most owners work in their businesses and not on their businesses. McDaniel, veteran of over 1,800 valuation and M&A deals, has seen the look of surprise on client faces far too often: "It's only worth that much?!"
In the rush of day-to-day work and decisions, business owners sometimes forget that their business is an investment—and something they need to watch, nurture, and care for just as they would a valuable antique vase or painting. Know and Grow the Value of Your Business: An Owner's Guide to Retiring Rich shows readers how to develop the "investment mindset," value the business, bolster that value and maximize the return on their investment, and, finally, "exit" the business either through a sale to outside parties or by passing it on to family or other business insiders.
This information couldn't be more important: In published surveys, and based on McDaniel's personal experience, the majority of a business owner's wealth (60% to 80%) is tied up in the value of the business. This is their most important asset, but they usually guess at its value and have no concrete plan to increase that value. They also have trouble determining the optimal way to exit the business. More often than not, this leads to heartache; the owner is not prepared financially or psychologically for life after exiting the business.
More than anything, this book shows that an investment is only successful when the owner is able to exit on his or her terms. An exit can occur through a well-thought-out plan, or it can be forced by circumstances beyond an owner's control—or something in between. This book explains the various exit scenarios and the advantages and disadvantages of each and provides owners with tools and exercises to help them determine which exit strategy is right for them. In short, this book helps business owners get the most for their business when they decide it's time to move on.
What you'll learn
The importance of treating your ownership interest in a business the same way you would treat the shares in your stock portfolio: "Like an Investment."
How a company is valued, using terms that business owners can understand.
The ways you can increase the value of your business and how an outside buyer will view your company.
Existing exit strategies, and the advantages and disadvantages of each.
Why timing might be the most critical component of your exit strategy.
How to begin the succession planning process and knowing the critical components of a good succession plan.
Who this book is for
Those with businesses with revenues up to about $30 million—90 percent of all business owners in the U.S., according to the United States Census Bureau. This amounts to over 12 million businesses in the United States alone. The principles the book espouses will be just as valid in countries besides the U.S. except for the tax advice author Tim McDaniel offers.
Table of Contents
- Title Page
- About the Author
PART I. Treating Your Company Like an Investment
- CHAPTER 1. Country Club Lifestyle
- CHAPTER 2. The Investment Mindset
PART II. Knowing and Growing Your Business Value
- CHAPTER 3. Valuation Fundamentals
- CHAPTER 4. Valuation Approaches
- CHAPTER 5. Growing Your Value
- CHAPTER 6. Selling Your Business
PART III . Getting Out Alive: Planning Your Exit
- CHAPTER 7. The Hardest Step: Succession Planning
- CHAPTER 8. Know Your Exit Options
- CHAPTER 9. Know Your Exit Strategy
- CHAPTER 10. Time for Action
- CHAPTER 11. Epilogue
PART IV. Appendices
- APPENDIX A. IRS Revenue Ruling 59-60
- APPENDIX B. Sample Engagement Letter
- APPENDIX C. Sample Due Diligence Request
- APPENDIX D. Sample Family Business Creed
- APPENDIX E. AICPA Statement on Standards for Valuation Services No. 1
- Title: Know and Grow the Value of Your Business: An Owner's Guide to Retiring Rich
- Release date: February 2013
- Publisher(s): Apress
- ISBN: 9781430247852