Buying and Selling a Business for Wealth: An Insider's Guide to Starting, Building and Selling Your Business for Substantial Gain

274 Pages·2007·0.85 MB·English

by  Kevin Uphill

IFC
Buying and
Selling a Business
for Wealth
Kevin Uphill and Alex McMillan
Thorogood Publishing
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© Kevin Uphill 2007
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Preface
Our aim in this book is to share the how, why and when of being a
successful capitalist through buying and selling a business for wealth.
If you currently own a business, or are thinking of starting or buying
one, then this book is for you. Additionally, if you advise business owners
this book may be useful.
Unless you are due one day to receive a large inheritance or win the
national lottery for the vast majority of us building and selling our own
business is the greatest opportunity that our society offers us to
become financially free. Imagine having enough money invested that
you need never worry again about paying the bills, being made redun-
dant, taking a holiday where and when you want. Financial freedom gives
you more opportunity to achieve life wealth in exploring opportunities
other than working.
We provide an overview of the technical aspects of the process: the how.
We have also examined the personal motivations, or the Big Adventure
behind deals: the why. There are other books on the technicalities, but
they ignore the fundamentally important aspect that delivering a
business transaction is a means to an end. The why, the human story
and motivations behind the deal are more important. Buying or starting
a business and then selling it should make you financially wealthy, but
it should also deliver life experience and time freedom.
We hope you enjoy the book, and achieving life wealth through a
transaction.
Kevin Uphill
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Buying and selling a business for wealth
Acknowledgements and
authors’ experience
In writing this book we have included real stories of people who have
achieved wealth through transactions and pulled on our and their
combined experience. Kevin’s experience comes from that of establishing
and building a National UK-based professional practice (Avondale) that
specializes in achieving transactions and life wealth. Alex’s expertise
comes from over 15 years as an executive coach, successful author, MBA
and acknowledged expert in the field of entrepreneurship, and chairman
of Club Entrepreneur. We have also pulled on the resources and expe-
rience of the many experts we know in the field, previous clients and
our work colleagues. This book would not be complete without an
acknowledgement of their help (you know who you are). A thank you
to our respective families is also deserved for believing that we could
author another book despite our already busy careers, and supporting
us in the late nights this entailed.
The Authors
Kevin Uphillwas born in the UK. After an early career in banking and
financial services, he established Avondale in 1992 in his early twenties.
From a two person professional practice the firm now has a national
network and consults on over 100 transaction projects a year. He is a
family man with one young daughter. He is the owner of a motor boat
cruiser much to the family’s dissent, a keen tri-athlete and marathon
runner, interested historian and avid reader. www.avondale.co.uk
Alex McMillanis a Management Consultant and business author with
a specific interest in entrepreneurs, who has set up businesses in both
recruitment and training. He has initiated a company which offers job-
hunting services via other people’s Internet sites. He is building up this
company for the purposes of selling for capital gain, applying all the
principles in this book.www.clubentrepreneur.co.uk
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Contents
Contents
ONE
Wealth creation.....................................................................................................2
Chapter focus............................................................................................................2
Introduction...............................................................................................................2
Financial wealth accumulation plan.............................................................................3
How is wealth created?..............................................................................................5
Why do people buy or sell a business?........................................................................7
Why you should work on selling your business.............................................................9
Summary.................................................................................................................11
TWO
Business owner – Who dares wins… .............................................................14
Chapter focus..........................................................................................................14
Introduction.............................................................................................................15
The owner/manager profile.......................................................................................15
Risk management....................................................................................................18
Passion for profit......................................................................................................20
Improving skills........................................................................................................21
Making it work.........................................................................................................22
Releasing the owner/manager investor within............................................................23
Summary.................................................................................................................25
THREE
Why sell? – Looking at the big picture............................................................28
Chapter focus..........................................................................................................28
Introduction.............................................................................................................29
Why sell? – your future............................................................................................29
Life cycles – what next?...........................................................................................32
The five types of wealth............................................................................................33
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Buying and selling a business for wealth
The eternal entrepreneur..........................................................................................36
The sale proceeds....................................................................................................37
Retreat and think.....................................................................................................38
FOUR
What is it worth? – The professional’s viewpoint.........................................42
Chapter focus .........................................................................................................42
Introduction ............................................................................................................43
The formula.............................................................................................................43
The multiple.............................................................................................................44
What multiple?.........................................................................................................45
What profit?.............................................................................................................48
Sale structure .........................................................................................................49
Asset and goodwill deals versus share transfers........................................................50
Revaluing the balance sheet (share transfers) ...........................................................52
The optimum purchaser,the optimum valuation.........................................................53
Should I be selling?..................................................................................................55
Art not science.........................................................................................................57
The valuation steps (a summary)...............................................................................58
FIVE
A buyer’s guide – The good,the bad and the ugly........................................62
Chapter focus..........................................................................................................62
Introduction.............................................................................................................63
Getting started.........................................................................................................63
Timing the purchase.................................................................................................64
Researching and setting your strategy.......................................................................65
Sources of businesses..............................................................................................67
Handling the seller...................................................................................................69
Look for potential.....................................................................................................70
Staff meeting...........................................................................................................74
Due diligence checklist.............................................................................................75
Potential purchase timetable.....................................................................................78
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Contents
SIX
Business planning – Mapping the way...........................................................82
Chapter focus..........................................................................................................82
Introduction.............................................................................................................83
Why you must write a plan.......................................................................................83
What should be in your plan? ...................................................................................85
Raising finance........................................................................................................88
Types of finance and terms.......................................................................................90
Planning tips............................................................................................................93
From start to finish...................................................................................................94
Business plan template............................................................................................97
SEVEN
Adding value – Acorns into oaks...................................................................104
Chapter focus........................................................................................................104
Introduction...........................................................................................................104
Working on and in the business .............................................................................105
Adding value by the hour........................................................................................106
Stand out...............................................................................................................108
Create barriers to entry .........................................................................................109
Pre-sale grooming.................................................................................................110
Tips and techniques for adding value......................................................................115
Summary ..............................................................................................................116
EIGHT
Branding – The difference that makes the difference................................120
Chapter focus........................................................................................................120
Introduction...........................................................................................................121
Examples of branding success................................................................................122
Managing the brand...............................................................................................122
Vive la difference!..................................................................................................127
Invent a niche and market......................................................................................129
Listening...............................................................................................................132
Summary...............................................................................................................133
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Buying and selling a business for wealth
NINE
Leader/managers – Showing the way...........................................................136
Chapter focus........................................................................................................136
Introduction...........................................................................................................136
Leader/managers...................................................................................................137
Invest in and retain people......................................................................................145
Motivating people...................................................................................................145
Build a community (culture)....................................................................................146
Leader/managers in the real world..........................................................................149
Warning signs of when leadership is lacking............................................................149
Leadership on purchase.........................................................................................151
Leadership succession...........................................................................................151
Summary...............................................................................................................152
TEN
How to sell – Cashing in..................................................................................154
Chapter focus........................................................................................................154
Introduction...........................................................................................................154
Cashing your chips in.............................................................................................155
How to sell.............................................................................................................157
Using an intermediary and advisor to sell your business...........................................161
Choosing an intermediary (broker/advisor)...............................................................163
Rules for finding and managing buyers....................................................................167
Structure of the deal...............................................................................................171
Tax and deal structures?.........................................................................................183
The sale process – a summary...............................................................................185
Where next?..........................................................................................................190
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