Business Exit Planning: Options, Value Enhancement, and Transaction Management for Business Owners

209 Pages·2011·0.792 MB·English

by  Les Nemethy

Business
Exit Planning
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Business
Exit Planning
Options, Value Enhancement,
and Transaction Management
for Business Owners
LES NEMETHY
John Wiley & Sons, Inc.
Copyright © 2011 by Les Nemethy. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Nemethy, Les.
Business exit planning : options, value enhancement, and transaction management for
business owners / Les Nemethy.
p. cm.—(Wiley fi nance series)
Includes index.
ISBN 978-0-470-90531-9; ISBN 978-1-118-02297-9 (ebk); ISBN 978-1-118-02295-5
(ebk); ISBN 978-1-118-02296-2 (ebk)
1. Sale of business enterprises. I. Title.
HD1393.25.N46 2011
658.1′64–dc22
2010053528
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
To my father

Contents
Preface xi
Acknowledgments xv
Disclaimer xvii
Foreword xix
Introduction: The Challenge of Exiting Your Business 1
Three Overarching Themes 6
A Few Words of Advice 9
PART I
Business Exit Planning 11
CHAPTER 1
An introduction to Business Exit Planning 13
Ways to Exit Your Business 14
What is Business Exit Planning? 15
Evidence on Why Business Exit Planning is Necessary 16
Understand Your Motives 17
The Special Case of Retirement 20
CHAPTER 2
Begin with the Endgame in Sight 23
Develop a Game Plan 24
Value Systems and Visualizing the Endgame 25
vii
viii CONTENTS
CHAPTER 3
Exit Options 29
Intergenerational Transfer 29
Initial Public Offering 32
Merger 35
Hiring Professional Management 36
Management Buyout 37
Refi nancing 38
Employee Stock Ownership Plan 39
Liquidation 39
Choosing the Right Exit Option 39
CHAPTER 4
Building Your Team to Assist Your Exit 43
Reasons for Building a Team 43
Composition and Role of Your Team 45
Selecting Advisors: An Overview 53
Your Advisors’ Ethical Standards 55
CHAPTER 5
Building a Business with Sustainable Value 57
Look at Your Business from an Investor’s
Perspective 58
Clarifying and Adjusting Corporate Strategy 59
Corporate Governance, Systems, and
the One-Man Show 61
Pre-Transaction Restructuring 68
Identify and Manage Risks 72
Operational Improvements to the Business 78
Non-Arm’s-Length Situations 82
CHAPTER 6
Business Plan and Valuation 85
Reasons for Making a Business Plan 85
Should You Perform a Valuation of Your Business? 87
Recasting Financial Statements 88
Building a Business Plan 90
Introductory Comments on Valuation 91
Types of Valuation 93
Adjustments to Valuations 96