Valuable Tips

12/22/16 12/22/16

Exits Are Inevitable, Failure Is Not: Planning a Successful Exit

We understand that business owners are so busy addressing today’s economic challenges that they can overlook the critical task of Exit Planning. We also understand that, at some point, all owners exit their businesses. When that day arrives, owners want to exit on their terms, the most important of which are financial independence and choosing the person or entity that will receive or buy the business.

Designing a comprehensive Exit Plan—which is both based on your Exit Objectives and flexible enough to adapt to changing economic, business, and personal circumstances—can be the difference between liquidating your company and selling/transferring it for millions of dollars.

Let’s look at the characteristics of a good Exit Plan in light of a sad but common story of two hypothetical business owners who failed to plan:

Several years ago, Doug, an Exit Planning Advisor, met with Jim and Tim McCoy, the owners of a thriving construction company. What Doug assumed would be a business-planning meeting turned into a “we are getting out of business so how do we do it?” meeting. As successful as they were, the McCoys were tired of navigating the labyrinth of government regulation and paying ever-increasing taxes. Ultimately, the day-to-day grind of running a multimillion-dollar company had taken its toll.

For the McCoys, a sale to a third party was not feasible, not only because neither brother was willing to remain with the company after the sale but also because they had failed to develop a strong management team. Few savvy buyers will purchase a company without a great management team committed to remaining after the sale.

Transferring ownership to one or more key employees also was out of the question. None had been groomed to assume ownership responsibilities nor had the McCoys taken action to fund this type of buyout.

Transferring the company to their children was impossible, because both owners’ children were too young to be active in the company.

The McCoys’ only exit option was to liquidate, because their highly profitable company had little worth beyond the value of its tangible assets. After the liquidation sale, dozens of employees lost their jobs, and Jim and Tim left millions of dollars on the table.

How Can You Avoid the McCoys’ Fate?

· Plan Ahead: The issues Jim and Tim ignored (including not grooming a management team and failing to plan) proved to be their downfall. However, these and most other issues—if addressed in advance of an owner’s exit—can be resolved in a manner that (1) is cost-efficient, (2) enables the business to be transferred, and (3) adds to the value of the business. In our experience, most owners with Exit Plans need 5–10 years to implement all of the strategies necessary to exit successfully. Owners without Exit Plans spend far longer than that waiting and hoping for a buyer.

· Set Measurable Goals: An Exit Plan must set goals, provide accountability, and measure results. This is especially important when goals include protecting and growing value, and minimizing taxes.

· Incorporate Flexibility: Plans should have the flexibility necessary to react quickly and effectively when the unexpected happens.

· Use a Proven Process: Ultimately, we suggest that owners engage in The Seven Step Exit Planning Process™, a systematic process that has helped thousands of owners exit their businesses. One way to look at our Exit Planning Process is to associate each Step with a question. As you progress through the Process, you will be able to answer “Yes” to each one.

1. Setting Exit Objectives: Do you know your retirement goals and what it will take—in cash—to reach them?

2. Determining Business Value: Do you know what your business is worth today, in cash?

3. Increasing Business Value: Have you identified the best ways to increase your company’s value and cash flow?

4. The Third-Party Sale: Do you know how to sell your business to a third party without having to pay exorbitant taxes?

5. Transfer Your Business to Insiders: Do you know how to transfer your business to insiders (family members, co-owners, or employees) for cash rather than give it away?

6. Protect Your Business: Do you have a continuity plan for your business should you die or become disabled?

7. Protect Your Family: Do you have a plan to secure your family’s financial security should you die or become disabled?

The thought and actions that go into answering these questions constitute your unique Exit Plan. For more information about how to begin answering each of the aforementioned questions affirmatively, contact us today.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

11/21/16 11/21/16

The Impact of Value Drivers on Sale Price

Business experts may mention "Value Drivers" as if everyone knows what they are, how they work, and where their impact will be greatest. It can be difficult or frustrating to know that building business value is a frequent topic of discussion, but actually building value is sometimes easier said than done.

It may be the case that one business has buyers lined up willing to pay top dollar while another sits on the market for months or even years. What do buyers look for in a prospective business acquisition?

There are many opinions about which attributes or characteristics buyers seek, but here’s what we have observed: The characteristics buyers seek must exist before the sale process even begins, and it is your job as the owner to create value within your business prior to the sale. We call characteristics that impact value “Value Drivers.”

Look At Your Business Through A Buyer's Eyes

To grasp the importance of Value Drivers when preparing to sell a business, owners must put themselves in the buyer’s shoes. Consider the following case study, which illustrates how a buyer might approach the search for effective Value Drivers.

The Alpha Company has earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2 million, an owner who runs the business, and systems and processes that create growth. The Alpha Company does not have a true management team in place, and the owner generates a majority of its sales. The owner is the locus of the company, holding both the CEO and CFO positions. With such overwhelming responsibilities, the owner is burning-out quickly.

By comparison, the Beta Company has EBITDA of $2 million and a solid management team that runs the business, systems, and processes. The management team creates efficiencies within the business, and the owner vacations for six weeks a year.

If you were a buyer comparing these two companies, which factors would you consider more likely to lead to a successful acquisition? How much more would you pay for a business with a strong management team (one of the most important Value Drivers)? Would you be interested in buying a business whose management team (i.e., the owner) walks out when you walk in?

Experts in getting businesses sold understand that companies that lack strong Value Drivers also lack a strong pool of buyers. The buyers that do come to the table do not arrive with pockets full of cash.

The Most Common Value Drivers

Consider the following important Value Drivers common to all industries.

· A Stable and Motivated Management Team: If owners can wait a year to sell their businesses, they should consider an incentive compensation system that is either cash or stock based and rewards key employees based on how the company performs (usually measured by increases in pre-tax income). Sophisticated buyers know that with a solid management team in place, prospects are good for continued business success. Without a strong management team, it may be difficult to sell the business to a third party or transfer it to an insider.

· Operating Systems That Improve Cash Flow Sustainability: Operating systems include the computerized and manual procedures used in the business to generate its revenue and control expenses (i.e., create cash flow), as well as the methods used to track how customers are identified and how products or services are delivered. The establishment and documentation of standard business procedures and systems demonstrate to a buyer that the business can be maintained profitably after the sale.

· A Solid, Diversified Customer Base: Buyers typically look for a customer base in which no single client accounts for more than 10% of total sales. A diversified customer base helps insulate a company from the loss of any single customer. If the majority of an owner’s customer base is made up of only one or two good customers, the owner should consider reinvesting profits into additional capacity that will make developing a broader customer base possible.

· A Realistic Growth Strategy: Buyers tend to pay premium prices for companies with realistic strategies for growth. Even if an owner expects to retire tomorrow, it makes sense to have a written plan describing future growth and how that growth will be achieved based on industry dynamics; increased demand for the company’s products; new product lines; market plans; growth through acquisition; and expansion through augmenting territory, product lines, and manufacturing capacity. This properly communicated, detailed growth plan helps attract buyers.

· Effective Financial Controls: Financial controls are not only critical elements of business management but also safeguards for a company’s assets. Effective financial controls support the claim that a company is consistently profitable. The best way for owners to document that their companies have effective financial controls and that their historical financial statements are correct is through a certified audit or a verified financial statement from an established CPA firm.

· Stable and Improving Cash Flow: Ultimately, all Value Drivers contribute to stable and predictable cash flow. It is important that the company’s cash flow remains substantial and continues to grow, especially in the year or so preceding the sale of the business. Owners can begin increasing cash flow today by focusing on ways to operate their businesses more efficiently by increasing productivity and decreasing costs.

You can install these Value Drivers and better position your company to secure a premium price upon your exit with the help of a trained Exit Planning Advisor.

If you have any questions about increasing the value of your business prior to your exit, please contact us to discuss your particular situation. We can help you identify and strengthen the current Value Drivers in your business, install additional Value Drivers, and create a road map to meet your overall Exit Objectives. We also have resources that explain Value Drivers in more detail and can help you apply these concepts to your business.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

11/2/16 11/2/16

Does Value-Building Equal Exit Planning?

Every day, we work with owners to build sustainable value in their companies. Some of these owners build value to make their companies more profitable, others build value with an eye on growth, while still others want to use systems that build value to become more organized. These are great reasons to build value, but we look at building value a little differently, because in Exit Planning, we take a longer view and help business owners prepare to exit their companies when they choose and for the amount of cash they desire.

Although building value is not the crux of Exit Planning, it is a necessary and principal part of every owner’s Exit Plan. In turn, Exit Planning provides the context for building value. In other words, building value serves many masters, the most important of which is allowing owners to reach their ultimate goal of converting their lives’ work into the post-business lives they desire.

When we talk about building value in the context of Exit Planning, we ask the following questions:

1. What is the company’s current value?

2. What value must the company achieve to enable its owner to reach his or her lifetime income and other Exit Objectives?

3. Which tactics can owners employ to close any gaps between today’s business value and the value they need upon exiting?

4. How can owners transfer business value most efficiently (in terms of taxes and otherwise)?

To answer these questions in an Exit Planning context, consider the case of Peter Daniels, a fictional business owner. Peter is 58 and married to Pam, who also is 58. He is the sole owner of Daniels Food Processing Inc. and has a salary of $250,000. His Exit Objectives are as follows.

· Exit at age 63 (five years from now).

· Post-exit income of $200,000 for 30 years. (Please note: Owners tend to underestimate the future amount of annual income they will want and need. In doing so, they set themselves up for a disappointing post-exit lifestyle. In Peter’s case, he used a financial planner to arrive at a realistic income goal.)

Peter has no specific successor in mind. Now, consider the status of Peter’s company, Daniels Food Processing Inc.

· Annual cash flow of $250,000

· Estimated current value of $1–1.25 million, as calculated by a business appraiser.

To finance the Daniels’s post-exit income needs, given the number of years they want income and their assumed rate-of-investment return (7%), Peter needs to sell his company for $3–3.5 million to net $2.5 million. Thus, Peter must increase the value of his company by at least $2 million if he is to exit on his terms.

In Peter’s case, the Two Million Dollar Question is “How can Peter increase the value of his company by $2 million over the next five years and thus close the gap between the business value he has and the business value he needs?”

1. What is the company’s current value?
Based on an industry rule of thumb, Peter thought he knew his company’s current value. In Exit Planning, because the company’s current value is a cornerstone of the work to follow, guesses and assumptions about value are grossly inadequate. Owners must retain valuation experts to establish at least a thumbnail valuation to know what their companies are really worth.

2. What value must the company achieve to enable its owner to reach his or her lifetime income and other Exit Objectives?
In creating an Exit Plan, owners quantify the amount they will need to support the post-exit lifestyle they desire. Usually, they work with a financial-planning professional to establish the “working assumptions” that Peter established above (life expectancy, the future value of non-business assets, and rates of return on investments). Owners also must ask and answer hard questions about how lavishly or simply their post-exit lifestyles will be. Without an accurate and realistic assessment of where an owner is and wants to be, it is difficult to develop and implement any plan.

3. Which tactics can owners employ to close the gap between today’s business value and the value they need upon exit?
Only after determining the size of the gap between current and desired business value does it make sense for owners to decide what needs to be done to close it. Understanding how far one has to go within a specific time frame provides the context for achieving one’s goals. Without a time-frame, most owners will not take the sustained action required to accomplish what is needed, instead pledging to plan right after “this crisis,” “this major project,” or “this busy season.” However, these pledges are rarely kept.

The time frame inherent in the gap analysis creates responsibility: It requires self-discipline, and each small step is subject to the accountability that we teach our children but fail to practice when it comes to Exit Planning. By using gap analysis as the foundation for Exit Planning, owners can identify and implement specific actions that will increase the value of their companies. While there are myriad value-building actions from which owners can choose, the most critical are those that enable a business to operate successfully without its owner’s involvement. These include the creation of a stable and highly skilled management team, understanding and using current financial information to track and alter company performance, and the installation of sustainable, organization-wide systems.

An Exit Plan also should include collecting, interpreting, and using the data necessary to track progress toward an owner’s goal. Tracking may include monthly, quarterly, and annual cash flow projections, as well as the creation of an annual business plan.

4. How can owners transfer business value most efficiently (tax and otherwise)?
Good Exit Plans view value-building and all other activities through an income-tax lens. Owners use every legal strategy and tactic to minimize taxes while they earn money, grow value, and transfer that value. Because taxes skim off value that takes decades to create, it is far more effective to act with a grasp of current and future tax consequences. Owners should use knowledgeable advisors long before the eventual transfer of their companies in a way that limits the tax burden (as far as legally possible) for both the owner/seller and the buyer.
Exit Planning’s value-building tools can close the often significant gap between a company’s current and desired values. We are eager to help you figure out whether you are facing such a gap and if so, quantify it and help you close it.

If you’d like more information about how we can help you increase the value of your business in the context of planning your business exit, please contact us.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

10/20/16 10/20/16

Knowing Business Value is a Very Good Place to Start

People don’t want to spend money on things they don’t need. So why would you need an estimate of your company’s value if you don’t expect to leave for several or many years? You may not if you fall into one of two groups:

· Owners who are sure that their business exits are more than 10 years away.

· Owners who are certain that the value of their companies is miniscule compared to what they will need upon sale or transfer.

However, many owners look to the value of their businesses as the chief source of liquidity for their post-exit lives. Owners intend to leave as soon as is feasible rather than when they are completely burned-out. Therefore, most owners need to know the value of their companies now so they can be smart about creating greater business value as quickly as possible.

· Owners who are sure that their business exits are more than 10 years away.

· Owners who are certain that the value of their companies is miniscule compared to what they will need upon sale or transfer.

Knowing the value of your business today is critical, whether you plan to leave your business tomorrow or in five years, for the following five reasons:

1. An estimate of value establishes the starting line and distance to the finish.

An estimate of value tells owners where their unique race to their exits begins. The owner’s job, whether the company is worth $500,000 or $50 million, is to fill the gap between today’s value (the starting line) and the value he or she needs upon exiting (the finish line). Based on today’s value, an owner’s race to the finish line may be shorter, longer, or perhaps much longer than expected. Once owners know how far they and their businesses need to travel, they can begin to create timelines and implement actions to foster growth in business value.

2. An estimate of value tests owners’ Exit Objectives.

An estimate of value helps owners determine whether their Exit Objectives are achievable. Let’s assume that an owner, Kate, decides that her finish line (i.e., financial objective) is to receive $7 million (after taxes) from the transfer of her business interest. Kate wants to complete her race in three years (timing objective). An estimate of value will tell her whether the distance between today’s value and the finish line is too great to reach in three years. If the growth rate is unrealistic for Kate’s business, she must either extend her timeline or lower her financial expectations.

3. An estimate of value provides important tax information.

An estimate of value gives owners a basis on which to analyze the tax consequences of Exit Path alternatives. Once an owner chooses a path, the value estimate provides a basis for the owner’s tax-minimization efforts. Taxes can take a significant chunk out of a business’ sale price; therefore, the value of the company (i.e., what a buyer pays for it) usually must exceed the amount of money owners need to fund their post-exit lives. The size of that excess depends on how owners and their Exit Planning Advisors design their exits. Exit Planning, in turn, begins with knowing the company’s starting value and the distance to the finish line.

4. An estimate of value gives owners a litmus test.

Knowing how much value they need to create to meet their objectives helps owners determine where they need to concentrate their time and efforts. Instead of growing value arbitrarily, dedication to a goal may enable owners to exit sooner than owners who do little or no planning, with the same amount of after-tax cash. Pursuing Exit Plan success always begins with a starting value.

5. An estimate of value provides an objective basis for incentive plans.

As owners design incentive plans for key employees (e.g., stock-purchase, stock-bonus, and nonqualified deferred-compensation plans) to motivate them to increase the value of the company (so owners can work toward a successful exit), they must base these plans on an objective estimate of value. Owners and their employees need a current value (or starting line) on which they can rely confidently.

The Estimate of Value Is Not a Full-Blown Valuation!

We know you are thinking, “How much is this going to cost me?” However, we’re suggesting that you only need an estimate of value to establish a benchmark; you do not need the opinion of value, which might precede your transfer of ownership years from now. An estimate of value typically costs about half as much as a standard valuation opinion and is the basis for the later, complete valuation. However, it lacks the supporting information contained in a written opinion of value and is used for planning only. It cannot be relied upon for tax or other purposes.

Failure to Value

On some level, all owners recognize that they will leave their businesses someday. While you might not yet have a vision for the second half of your life, you must understand that exiting your company is likely to be the largest financial transaction of your life. Does it make sense to go into that transaction and the second part of your life without an objective understanding of your company’s value? An estimate of value can save precious time as you build value and pursue the exit of your dreams.

If you would like more information about the role of business valuation in Exit Planning, please contact us.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

10/5/16 10/5/16

First Things First: Prioritize Your Objectives

"You've got to be very careful if you don't know where you're going, because you might not get there." — Yogi Berra

It is not always easy to interpret Yogi. In this case, perhaps he is advising you to figure out just where you are headed in your business. As you near the time when you will leave behind the daily worries and stresses of business ownership, have you defined your successful exit? Do you know where “there” is, much less how to get there? Unless you set and prioritize your exit goals or objectives, you may have too many, or they might conflict, but in either case you may not make much headway.

"You've got to be very careful if you don't know where you're going, because you might not get there." — Yogi Berra

The clearest example of a failure to set objectives may be Bill Wilson, a business owner who recently told us that he wanted:

· To leave his business within three years (although he was ready to leave right away)

· Financial security, defined as a seamless continuation of his current lifestyle

· To transfer the business to his management team

A quick review of Bill's personal financial statement, however, revealed that most of the income required to maintain his lifestyle would have to come from the business. Unfortunately, his business wasn’t large enough to attract a cash buyer. And, since Bill had done no Exit Planning, his employees had no funds with which to purchase his ownership interest. A long term installment note seemed to be the only answer — a risk Bill was unwilling to take.

Contrast this unpalatable solution with Bill's objectives — objectives which could have been achieved had he taken the time (well before he wanted to leave the business) to establish and to prioritize his exit objectives.
If, for example, an owner’s need for financial security prevails, selling a business to a third party for cash may be the best and quickest exit path.

If, however, attracting a qualified third party is unlikely or undesirable, an owner may need more time to devise and to implement a transfer to one or more insiders (children or employees) that provides the owner adequate cash.

On the other hand, if an owner’s desire to transfer the business to a specific person or group trumps his or her need for financial security, and his/her deadline for departure draws near, financial security in the form of "up-front" cash must take a backseat.

As you can see, owners must consider—simultaneously—the three primary exit goals (listed below). Ask yourself which is your most important exit objective and rank your answers from 1 (most important) to 3 (least important).

Financial security
1 2 3

Transferring the business to the person of my choice (may include key employees, co-owner or child)
1 2 3

Leaving the business when I want (could be immediately or never)
1 2 3

Prioritizing your objectives will help you choose your overall path and design your Exit Plan. For example, if you want out—soon and with cash—but your business cannot be sold today, do you wait until market conditions improve or sell now to your employees? While prioritizing your objectives is not easy, doing so gives you a framework for decision making.

Start with the choices and priorities in the exercise above, but if you have any difficulty we can ask you some additional questions that will help you make your selections. When combined with an overview of some critical facts about you and your business, the Exit Planning solutions begin to crystalize. While we don’t have a ready-made Exit Planning package ready for you, we do have the background and the Exit Planning process that we believe will shine a spotlight on the Exit Planning solutions that are best for you. We’d like to sit down to talk with you about it sooner rather than later. Gathering your Exit Planning resources today can help you confirm your path to the future.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

9/26/16 9/26/16

Why Exit Planning? Why Now?

"In preparing for battle, I have always found that plans are useless but planning is indispensable.” - Dwight D. Eisenhower (As quoted in Six Crises by Nixon, Richard (1962). “Krushchev. ” Doubleday.)

General Eisenhower’s point was that the process of creating a plan provides value because it forces the planner to consider (and make provision for) “What if events don’t proceed as planned?” A plan not only provides context and the basis for adapting to new and unanticipated events, it also provides alternatives based on assumptions about goals, objectives and resources that may need revision.

As advisors, we know that business owners who create business plans are able to react more quickly to new events than can those without.

Unfortunately, even owners who have business plans fly without Exit Plans, co-pilots, or maps to help them when storms force them to alter course toward their business exits. If an unanticipated event arises (such as a significant change in the national economy), they shelve their Exit Planning thinking (and thinking is all they may have since they haven’t created a written plan) because their only option is to wait for conditions to stabilize or improve. These successful owners would never consider a similar passive response to be acceptable in a business plan.

If the value of an Exit Plan isn’t already obvious, let’s look at a few hard, cold facts.

First, you are far from the only fish in the sea. As the wave of Baby Boomers (born between 1946 and 1964) reaching and passing retirement age crests, the departures of those who own businesses could result in a glut of companies for sale, driving down valuations and giving new leverage to buyers. Simply put, it may become a “buyer’s market” and sellers, such as yourself, may be forced to accept less-than-ideal prices or terms for the sale of your business.

Second, if you are a Baby Boomer, the generation following you is not nearly as numerous so expect far more sellers than buyers in the marketplace. This too, adds to the glut.

Third, even during boom times not all owners who want to sell their business are actually able to sell. There is quite a lot of variation, even among similarly sized businesses in the same industry. Differentiating factors become magnified and elements that were not that important while you were growing your business can become glaring deficiencies. You need a clear competitive advantage to grow, thrive and ultimately exit on your preferred terms.

Fourth, if you choose to wait for an ideal time to exit as your exit strategy, such as when buyers are active or markets are good, you give up control of the timing of your exit, how much and the terms of payment you’ll receive, and even the type of buyer. Are you confident that the next boom cycle in your industry or in the economy overall will appear when you need it?

And finally, if your reason for putting “Exit Plan” at the bottom of the list is because you believe that until the economy or your business improves to a certain level your time and money are better spent preserving and growing business value, understand that working to create a valuable company is an integral part of any successful Exit Plan. So why not start (or move the ball forward) now?

The benefits of Exit Planning include:

· preparing you, your business and your family for a successful future

· control over the timing and terms of your exit

· customized solutions and action steps tailored to your exit objectives

· laser focus on the value-building aspects of the business that buyers seek and successor owners need

· time-sensitive accountability for each action step necessary to build value and position the business for the next owner

· benchmark changes in business value, management team performance and other critical factors

Concentrating your effort today on growing business value—either as a discrete project or as part of a comprehensive Exit Plan—affects both your ability to sell your company and the price you will be paid. In fact, your value-building plan will be inseparable from your Exit Plan.

Bottom line, the process of planning is what we mean by working on, not just working in, your business. Only the planning process sets up the best opportunity to exit your business on your own terms despite the glut of sellers, dearth of buyers, vagaries of the market and investment world, and the myriad of known and unknown influences on your business.

You can start planning today by working through a narrowly focused set of top priorities, or by attacking all aspects of the future of your ownership as a comprehensive process. It’s your choice. Starting a planning process that systematically addresses the unique issues that are relevant to you and your company positions you to impact your future. We’d like to talk with you about your goals and how Exit Planning might impact those goals.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

9/7/16 9/7/16

Former Business Owners Express No Regrets About Selling Out

"I can't play golf every day."

"My wife wants to see more of me — but not at every breakfast, lunch, and dinner!"

"What do other ex-owners do after they've sold out?"

Failing to answer these concerns can create vacillation, reluctance, and ultimately, an unwillingness on the part of many owners to proceed with planning for their business exits.

To examine these concerns, lets analyze a panel of former business owners involved in the owner to former owner transition. All three reported that selling out was the "best thing possible for me and for my family." That said, each owner approached the sale differently and each has pursued different interests in its aftermath.

"I can't play golf every day."

"My wife wants to see more of me — but not at every breakfast, lunch, and dinner!"

"What do other ex-owners do after they've sold out?"

Failing to answer these concerns can create vacillation, reluctance, and ultimately, an unwillingness on the part of many owners to proceed with planning for their business exits.

Tom Frankl was 62 when he sold his high-tech manufacturing firm. He was prompted to sell first when his accountant introduced Tom to Exit Planning and helped him put in place a successor management team. Complementing this concrete Exit Planning step was Tom's realization that his emotional connection to the business was loosening. When these objective and subjective events converged, Tom began working with his advisors to orchestrate a sale.

Bill Dirrito, the owner of a clothing and apparel manufacturing company, entered his business with one goal: reach $50 million in sales and sell out. Bill reached that threshold and determined that he'd have to make a huge investment to retain his current market share so he hired a transaction attorney and an investment banker and sold the company.

Unlike Bill, John Six, the 55-year old owner of a low-tech manufacturing company was not focused on an eventual sale. In fact, he didn't want to sell because he felt he finally "had it going just right."

When confronted with the idea that the time to sell coincides with the existence of continued upside potential, John started thinking about the hard times he'd been through. If hard times returned, he wondered if the company could survive and knew that losing his "upside" would be the least of his worries. He, too, made the call to his advisors.

Having all arrived at the closing table via different routes, each now-former owner has found a similar satisfaction in the decision to sell and in life after the sale. Tom arranged his sale so that his employees kept their jobs and gained greater career opportunities. This gave and continues to give Tom more peace of mind. While he did not have a detailed plan in place for life after the sale, he quickly found new outlets for his energy. He has become the "Park Superintendent" of his 70-acre property. He's spending time with his wife and family, has time to travel the world, is considering developing some farmland and has taken an active role in community philanthropy. In Tom's words, "One of the things I appreciate most in this 'retired life' is that it isn't a 'retired life' at all."

John echoes Tom's comfort with this decision. "Of course I wondered what I would do [after the sale] because I was in that business for 30 years. But the day I walked out of there I never looked back. I never missed it. It's incredible but my schedule is calendared 18 months ahead." On John's calendar are motor home vacations, developing an industrial park and expanding his world class collection of race cars. John leaves the house by seven each morning and doesn't find his way home until late afternoon.

Bill, the planner of the group, anticipated that he'd need a place to go— outside of his home — on the day after the sale. He rented and equipped an executive suite and mapped out the first three months after the sale. Today, he spends time on his hobbies (golf, horses and motorcycles). He has educated himself about investing, advises other business owners and works collaboratively with his investment manager.

By any yardstick these former owners remain engaged and vital. They have moved into a new era in their lives — an era untroubled by financial concerns. Not every former owner has the same experience, but our firm believes that owners who thoughtfully plan their exit increase the likelihood that they will be satisfied with their exit and whatever follows. We’d like to sit down and talk about the role that we can play in crafting a future that works best for each and every business owner.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

8/22/16 8/22/16

Is Exit Planning Worth the Time and Money?

When we talk to business owners about the value of Exit Planning, we are talking about orchestrating a business exit that fulfills their unique personal and financial goals. More often than not, the business is the only asset that has the potential to deliver the results that the owner wants and needs. Since tackling a task of this magnitude can be daunting, owners sometime ask whether devoting the necessary time and money to this project is really worthwhile.

Watch Your Emphasis

Good Exit Planning can be the difference between a successful ownership transition and a complete derailment of the departure and of all the owner’s goals. Exit Planning is not, as others might have you believe, a thoughtful sale of a business. It is much more. As a business owner, your emphasis should be on the Planning, which will in turn, support theExit. “Planning” is the key concept.

It all starts with understanding your own objectives. When an owner sets her objectives in an Exit Planning context, she does so methodically and proactively. Owners who wait until entering the business sale process to decide how much cash they want and need from their companies, do so reactively. Often, they make hasty decisions or are blinded by attractive bait held out by less than scrupulous buyers.

Early in an organized and systematic Exit Planning process, owners place a realistic value on the company. If an owner has one foot out the door, or suffers from the fatigue of ownership, finding out the company is not worth what he or she had hoped is a painful experience. Even more painful is the subsequent rededication of effort to building the value of the company.

Even more powerful than setting out your objectives and understanding company value, the element of Exit Planning that gives an owner the biggest bang for the buck is, without a doubt, the emphasis that Exit Planning places on building and protecting business value. Owners often don’t realize that focused attention on building value is an essential part of the exit. “If I’m leaving, why would I build value?” Keep in mind that Exit Planning includes a heavy emphasis on Planning, and the result is a more successful Exit.

Let’s Be Specific

Let’s look at just one of the many ways that Exit Planning shifts the emphasis to Planningfor the benefit of the Exit. A technique that we use to motivate managers to remain with a company long-term and after a sale is the “Stay Bonus”. An effective Stay Bonus accomplishes three tasks:

1. It gives the key managers a reason to stay.

2. It is structured so that it increases the value of the company.

3. It includes a penalty (usually in the form of a covenant not to compete) that deters key managers from taking key clients, vendors or trade secrets with them, should they leave before or after the sale.

The Stay Bonus is a carefully structured compensation program with details designed to fit your particular business needs and timeline. It encourages key managers to support a sale of the business and allows them to benefit financially from the successful sale.

The Stay Bonus supports the transition from old ownership to new, by aligning the motivations of the departing owner, the new owner, and the management team. Coupled with restrictions on what those managers can do if they leave the company, the overall Stay Bonus package creates real value.

Think about it – if a buyer is evaluating two businesses that are exactly the same in all other respects, the one that can document an increased likelihood that top management will stay and work hard for the new owner will more likely get the offer, and at a higher price too.

Owners who participate in an intentional Exit Planning process often find that Exit Planning is indeed well worth the time and money devoted to it. If you’d like to learn how Exit Planning might, in turn, actually save you time and money, please contact us.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

8/9/16 8/9/16

Navigating the Choppy Waters of a Sale to a Third Party

So what if you’ve never sold a business before? Who better to lead the sale process than the guy who knows far more about the business than anyone else? Who better to steer the ship than the gal who knows exactly what she wants from the sale of a business?

Before you answer, pause for a moment to consider the possibility that you might just be the worst possible person to sell your company.

Why? As the one most emotionally attached to your business, you will likely find it difficult (if not impossible) to negotiate with a prospective buyer in a detached, dispassionate and effective manner.

In the mid-market range, most buyers are experienced and skilled in buying companies just like yours. They understand that all deals travel rough and shark-infested waters because they are the sharks! Their favorite meal is the owner sailing the sale waters alone.

Further, at some point, all sales negotiations become intense. Experienced transaction professionals anticipate and manage the inevitable lulls and storms that few owners have the stomach to endure.

But let’s assume (as you might) that you will have no problem navigating the rough waters of the typical sale process. Can you do so while simultaneously doing everything necessary to keep your business running at full steam? Rare indeed are the owners who can keep their companies running at peak performance while negotiating the intricacies of a sale.

If there was ever a time to stay focused on your company, the period during which you negotiate the sale of your business (often six months or more) is it. Any drop in company productivity, sales, or income is like blood in the water and will be subject to the buyer’s scrutiny and has the potential to scuttle even the best deal.

If you need another reason to decline the lead role in sale negotiations, keep in mind that once the deal closes, you are the only member of the cast who may have to work with the buyer as an employee. The more crucial you are to the success of your company, the more likely it is that a buyer will require your continued services after the sale. For that reason, many sellers understand that it may be in their long-term interest to assume a less visible (and thus less adversarial) role during the sale process.

Consider that if you allow your deal attorney, business broker, or investment banker to take the lead in the negotiations, you are better positioned to remain detached from, yet in control of, the process. For example, if your lead advisor reaches an impasse with the buyer’s representatives, you can insert yourself, at the appropriate time, to break a deadlock. This is precious capital that you cannot afford to squander by being in the thick of the fray day in and day out.

As transaction intermediaries (business brokers and investment bankers) are quick to point out, the right transaction intermediary should bring value to the sale process. They argue that you should receive more money on better terms when they organize and conduct negotiations.

You may find the assistance of a good transaction intermediary to be valuable in:

· Assessing the marketability of your company

· Accurately pricing and valuing your company

· Locating qualified buyers

· Conducting a competitive auction

· Negotiating and closing the deal

For all of these reasons, put your energy into selecting the best possible crew: an Advisor Team (including a transaction intermediary) that has navigated these waters—many times.

While you may depend on your crew to navigate your voyage to a safe harbor, you remain the captain of the ship. If you have questions about the sale process, your role in it, or the role of your advisors, we can help. Please contact us.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

7/29/16 7/29/16

Exit Your Business Without Leaving It

As advisors, we often hear from business owners some variation of the following comments:

 “I think it is time to back away from my business.”

 “I'd really like the freedom to do whatever I want, whenever I want.”

 “I’m tired of running this company, but if I sell, I'm unlikely to get the sale price I want in

today's merger and acquisition marketplace.”

 “If I could cash out, where could I invest and generate a reasonable rate of return?” Don't

even think about suggesting that I put my money in the stock market!! Even if I were

foolish enough to let you do so, I doubt you could match the return I get on investments in

my own business.”

Faced with limited prospects, owners often wonder if, rather than exiting, they can “back away” from their companies. They contemplate treating their companies as investments that they continue to

own.

As advisors, we often hear from business owners some variation of the following comments:

 “I think it is time to back away from my business.”

 “I'd really like the freedom to do whatever I want, whenever I want.”

 “I’m tired of running this company, but if I sell, I'm unlikely to get the sale price I want in

today's merger and acquisition marketplace.”

 “If I could cash out, where could I invest and generate a reasonable rate of return?” Don't

even think about suggesting that I put my money in the stock market!! Even if I were

foolish enough to let you do so, I doubt you could match the return I get on investments in

my own business.”

Many owners realize that today's merger and acquisition market contains fewer cash buyers. Consequently, owners may be reluctant to offer their companies for sale. They may be convinced that there could be less risk in keeping their businesses—at least in the short term.

In addition to a scarcity of all-cash buyers, except for the top companies in the market, the merger and acquisition market is no longer supporting the valuation multiples of six or seven times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) achievable just a few years ago.

It may be difficult to dispute that the lack of cash buyers willing to pay fair value for successful companies, and poor investment opportunities may certainly be sound reasons for owners to choose to stay in their companies. The issue for many owners then is: how do I back away and let others run the business without transferring ownership and control?

One answer is to engage in Exit Planning as if you were going to exit your business. After all, someday you will exit—even if you are carried out on a shield. As a subscriber to this newsletter, you know that traditional Exit Planning can help to enable you to orchestrate a successful, permanent exit. Intermediate Exit Planning, however, can help to enable you to forge a path toward an exit without giving up ownership.

In order to create an intermediate Exit Plan, you should:

 Establish your (owner-based) on-going business objectives

 Determine future cash flow needs for yourself and for your business

 Build a stronger business—defined as one capable of running without you

Let's look briefly at each component.

First, working with your Exit Planning Advisors, establish your timetable for backing away from your business. Communicate your wishes clearly: What does backing away mean to you in terms of time commitment, emotional involvement, financial guarantees, etc.

Second, you must determine the amount of income that you need the business to provide you. Ask members of your Advisory Team to help you make this determination.

Third, the characteristics of a stand-alone business (one that can run without you) may be the same characteristics third party cash buyers look for. A company that can be managed from a distance and that is able to pay adequate cash flow with little risk of nose-diving without its owner at the helm, may be a highly-attractive business. It can be valuable both to third parties and to the owner who wants to step away. To create that type of business, you should have in place critical Value Drivers.

They are:

 Increased cash flow

 Operating systems that improve sustainability of cash flows

 Improved facility appearance

 Debt reduction

 Documented sustainable earnings

 Growth strategy

 Strong management team

When you work with your advisors to fashion your stand-alone business, pay particular attention to creating repeatable, sustainable internal systems and developing and properly motivating your management team. In order to run successfully without you, your company needs systems and management in place capable of replicating your leadership.

The most valuable businesses are those in which the owners are no longer valuable. Planning to step away using intermediate exit planning can create a more vibrant business. When your day of departure does eventually arrive, both you and your business will be prepared.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

7/12/16 7/12/16

An Agreement Is Not A Plan

When co-owners are united in striving toward common business goals such as growing revenue, building business value and increasing cash flow, the business dynamics can be wonderfully positive and strong. Contrast that bright picture with what can happen when the goals of the owners diverge.

As you read further, ask yourself if the real issue facing owners in our examples is the misalignment of goals or a lack of planning for the day one owner wants to leave.

Owner Disability and Other Lifetime Transfer Events

What happens when one owner of a closely held company wants or needs to leave the company or sole owners want or need to leave theirs?

The reasons owners cite for leaving include everything from simple boredom to more dramatic and unexpected events such as the disability of an owner. As an example, let’s use an owner’s disability to illustrate some of the significant issues that arise when one owner needs to leave a company.

When disability strikes, companies undergo substantial hardships, both economic and operational. More importantly, in the absence of a buy-sell agreement, the disabled owner’s income stream from the company usually evaporates. This is the problem Steve Hughes, one of three equal shareholders in a growing advertising agency, confronted.

At age 38, Steve had a stroke and, as is the case with many stroke victims, his recovery was incomplete. Physically, he was the picture of health (his golf game even improved!); but he lost his ability to speak and read. Doctors told Steve he would never return to work.

Steve’s firm had a buy-sell agreement, but it covered only a buyout at death and an option for the company to buy Steve’s stock if he were to try to sell it to a third party. It was silent on an owner disability or the more common situation of owners choosing to leave the company. This glaring omission left the company and Steve in a classic dilemma.

The company, or rather the remaining shareholders, wanted to purchase Steve’s stock so that its future appreciation in value, now due to their efforts alone, would be fully attributed to them.

Consequences for Steve's Family

After the difficulty of the stroke and recovery period, Steve's family was still in a difficult position.

· Steve’s family soon realized that owners of stock in closely held companies rarely receive substantial benefits in the form of dividends or distributions because companies either accumulate or distribute (to active shareholders) profits in the form of salaries, bonuses and other perks.

· In short, Steve’s family would not get what it needed most—cash—to replace the salary Steve was no longer earning. Steve’s co-owners learned that their efforts to increase the value of the business would reward them and Steve in equal measure.

Solving the Remaining Shareholders’ Problem

Steve’s co-owners can buy Steve’s stock, but because they’d made no plans to do so, there are a number of obstacles.

1. There is a difference of opinion between buyer and seller related to the value of Steve’s stock.

2. Steve’s two co-owners want to pay as little as possible over as long a time period as possible because they (or the company): a) will pay with after-tax dollars; and b) they want to preserve capital rather than spend it on a non-productive asset such as stock of the company.

3. Steve’s family wants to receive full value for Steve’s stock as quickly as possible.

Before Steve’s stroke all co-owners were in sync. Steve’s disability, however, produced radically different owner wants and needs. To deal with this conflict, advisors must address four major issues with their owner-clients:

· Agreement on business value

· Funding for the buyout

· Agreement on payment terms for the buyout

· The income-tax consequences to the remaining owners on their payments to the departing owner

A buy-sell agreement drafted before Steve’s disability could have managed all these issues simply because all shareholders would have made the agreement when they shared the same ownership objectives. And, they didn’t know who would be exiting first!

Solving Steve’s Problem

Steve needs lifetime income for himself and his family. Even if the shareholders successfully resolve the buy-out issues listed above, the underlying problem remains: How can Steve maintain his former compensation level?

Let’s assume Steve’s pre-stroke, annual compensation was $250,000 and his interest in the company was worth $1,000,000. An all-cash sale might yield Steve after-tax investment capital of about $800,000. Can Steve expect a rate of return on his invested sale proceeds that matches his previous annual income from the company of $250,000 per year? The buy-sell agreement likely does not address this issue.

Many advisors believe their job is finished when owners sign a well-drafted buy-sell agreement. Steve would not agree.

Had Steve engaged in the Exit Planning process he would have quickly realized that a sale of his ownership during his lifetime (or at death) would probably leave him and his family with a fraction of the income they are now spending. Planning would focus on closing this income gap using his employment and buy-sell agreements, disability insurance, the creation of a wage continuation plan and other appropriate means.

We realize that otherwise well-drafted documents, such as buy-sell agreements, can create more problems than they solve. It is important to look at both the specific provisions of the agreement and put it in context by looking at the big picture and all possible scenarios that may occur. In this case that means we carefully address all of the ramifications of both lifetime and death buy-outs — for the business, the departing owners, and the remaining or surviving owners. We can talk with you about each scenario and the outcomes that you'd like to see, and then collaborate with your advisors to make sure that your agreements and planning are consistent with your goals.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

6/22/16 6/22/16

Equality and Fairness in Transfers to Kids

Stan Briggs was perplexed when he told his advisor, “My son, Patrick, has worked in the business for the last twelve years. In that time, the business has tripled its revenues and its profits. I’ve started to think about scaling back my activity and I realize how important it is (for my own retirement income) that Patrick be motivated to continue to grow the company profitably. Since I’d like to have him own the business someday, is there a way to start transferring it to him now? It seems unfair to make him pay for all of the business value since he created so much of it and since he is so important to my financial security. My son, of course, agrees wholeheartedly with this analysis but I’m not so sure that his mother and sister are on the same page. What issues do I need to consider?”

Equal vs. Fair

First, Stan must determine if his son is already paying for the business through “sweat equity” (more working hours, greater risk and lower compensation than he could have earned elsewhere). If so, any reduction in the purchase price is not a gift, but rather recognition of Patrick’s contribution.

Second, are Patrick's efforts adding value to the business? If so, should Patrick have to pay for his efforts by receiving a reduced share of Stan’s ultimate estate?

Third, if Patrick’s involvement in the business is critical to Stan’s retirement, Stan should consider tying his son to the business using “golden handcuffs,” such as awarding ownership if Patrick stays to run the business—and the business stays profitable.

Fourth, in many business-owning families, every child is offered the opportunity for involvement in—and ultimately ownership of—the family business. Many times, however, only one child forgoes the allure of the “outside world” to commit to working in the sometimes uncertain and illiquid world of a closely held business. (Not to mention that having you for a boss should have some payoff!)

Where to Start

Analyze the transfer issue in light of your own goals. Be certain that any transfer to children will satisfy your exit objectives. Explore with your advisors other issues and concerns that may arise as you begin to transfer ownership to a child. For example, how much money will you need after you leave your business? What, if anything, needs to be done for your key employees or for your other children? Temper and qualify all transfers to children in light of your over-arching exit objectives. In short, make certain the transfer of ownership to a child is also a good business and retirement decision.

Using Advisors

When considering a transfer of your business to a child, don’t underestimate the value of using experienced consultants and advisors. Their counsel, experience and input are perhaps never more important than when dealing with your own family. The need for independent, non-emotionally-charged advice can be critical. Having worked with other family businesses, these consultants along with your other advisors can offer practical advice.

Decision Framework

· First determine the level of contribution your business-active child has made to the value of the business.

· Second, determine the contribution that child must continue to make to ensure the achievement of your exit objectives. Those determinations can form the basis of what is “fair” with respect to both the business-active child and the other children.

· Third, use your advisors to help explain, guide and implement the transfer of the business.

We are happy, as always, to assist you with analyzing the issues involved with a transfer of ownership to children.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

6/8/16 6/8/16

Value Doesn’t Grow On Trees…Or Does It?

We all know that “money doesn’t grow on trees.” And neither does business value. You can’t just wait until you are ready to leave your business to find out how much “value” you need or want and how much “value” exists in your business. By then it will be too late. The tree metaphor is relevant, though. Value is something that you can grow, nourish and ultimately harvest in your business. Let’s look at an example.

We all know that “money doesn’t grow on trees.” And neither does business value. You can’t just wait until you are ready to leave your business to find out how much “value” you need or want and how much “value” exists in your business. By then it will be too late. The tree metaphor is relevant, though. Value is something that you can grow, nourish and ultimately harvest in your business. Let’s look at an example.

Picture three identical companies each engaged in moving time-sensitive freight for customers. All have a national presence, $2M in EBITDA (Earnings Before Interest, Tax Depreciation and Amortization) and about $25M in annual sales. It would be logical to assume that they all have about the same value.

In fact, one had little value, one sold for 3.5 times EBITDA and one sold for 5.5 times EBITDA. The difference in value was $3M to $7M to $11M.

Neither gross sales nor EBITDA alone determined the price and terms of these deals. The key to the variation in purchase prices was the presence or absence of value drivers in the companies as well as the ability of these value drivers to survive the owner’s departure.

Value drivers are internal characteristics of a company that buyers look for in acquisitions. You’ll see that it doesn’t matter if you plan to keep your business forever, transition it to family members, sell it to your management team or find an outside buyer - value drivers can give you more options, more flexibility and more money from your ownership interest. Strong value drivers are those that are effective and will continue to operate once the original owner departs. Consequently, those are the value drivers that increase both EBITDA and the multiple of EBITDA buyers may be willing to pay.

We may measure the effectiveness of value drivers in two ways: 1) their positive contribution to cash flow and 2) their ability to continue to contribute to cash flow under new ownership.

Think of it this way: why would anyone want to buy your business if its continued success is dependent on you-the departing owner? Buyers are more likely to pay top dollar for businesses that will not miss a beat when the original owner is no longer in charge.

Success in business is determined not by how well you run the business, but by how well the business runs without you.

Let’s look at the three freight-moving companies more closely to see what motivated buyers either to open their wallets or walk on by.

Company A: The owner/operator was responsible for management, operations and his personal and industry contacts were the source for new business. All roads ran through the owner so without him, the business had little value.

Company B: This company had a capable management team. Many of its systems and procedures were state-of-the-art. There was, however, one glaring weakness: the major customer, responsible for over 50 percent of the company’s revenue, had a decades’ long relationship with the company’s owner, not with the company.

Buyers are much less likely to pay millions for customer accounts that can, and indeed often do, go elsewhere the day after they find out the owner has sold the business.

Company C: Finding the owner of Company C wasn’t easy. She spent weeks on vacation or visiting grandchildren and when she was in town, was engaged in a variety of civic and charitable activities. She made workplace appearances only sporadically and left operations in the hands of her stable, effective management team.

She had deliberately created plenty of diversification in her company’s customer base knowing that one day she’d sell the business. She had thought about what she would look for in an acquisition so had included customer diversification as one of many attributes or value drivers she wanted in her company. She understood that value drivers were necessary to maximize sale-ability as well as the sale price and amount of cash she could demand from a buyer.

Interested buyers were delighted that she had changed her role in the company over the years so that a new owner could step in, almost unnoticed.

There are a number of value drivers that are critically important to today’s buyers. The value drivers that are most important to your business may or may not be the same as those that were identified for Company C. What we can say with some certainty is that value drivers can help your business value grow to bring you closer to the value that you need. If you are interested in learning more about them, we will be happy to sit down with you and talk about how value drivers might improve your business value.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

5/19/16 5/19/16

Death And Taxes vs. Preserving Wealth - The Final Exit Planning Contest

Full disclosure: Wealth preservation planning can’t help any of us cheat death, but it can help business owners to avoid taxes and achieve financial security. Read on.

The ideal Exit Plan (one that provides the business exit you desire) includes a strategy to help you preserve your hard-earned wealth from unnecessary taxation when it is transferred to your family. But to preserve wealth, business owners must take steps before they actually have it. In other words, to realize all of the potential benefits of various wealth preservation techniques, owners must make plans before they convert the value of their businesses to cash.

Full disclosure: Wealth preservation planning can’t help any of us cheat death, but it can help business owners to avoid taxes and achieve financial security. Read on.

The foundation for wealth preservation planning is found in the answers to two of the questions you answered in Step One of this Exit Planning process:

1. How much wealth do you want when you exit your company? And, for parents, the follow- up question: How much wealth do you want your children to have?

2. How long before you leave your company?

Using your answers as guideposts, you (and your advisors) can then choose the planning technique that will best preserve your wealth, provide for your family and minimize your tax bill. Let’s look at how one fictional owner used wealth preservation techniques to do exactly that.

George recognized that he’d waited too long to begin gifting part of his company to his kids. A week before, George’s CPA had told him that, based on the company's pre-tax cash flow of $2 million per year, his company could be worth as much as $12 million to a third party.

After recovering from that shock, George realized first that he didn’t need nearly that much cash to retire in style and second, that if he didn’t transfer at least half the value of his business before a sale, his family could be looking at millions in gift or estate taxes!

To remedy this situation George and his Exit Planning advisors:

1. Hired a Certified Business Appraiser to assign a conservative, but supportable value to the company.

Result: Based on current tax case law and valuation principles, the appraiser valued the transfer of a 49% minority (less than controlling) interest at $4 million. In her opinion, the appropriate minority discount was 35 percent of the full fair market value (assumed to be $12 million) of the stock.

Result: Using the 35 percent discount, George could give away half of the company to his children (a gift valued at approximately $4 million) and would pay no gift tax based on 2011 law which provides for a $5 million lifetime gift tax exemption.

While George was happy with the idea of not paying tax, he didn’t relish using most of his lifetime gift and estate tax exemption, and wanted a better answer. So he took another step to avoid needlessly wasting this most valuable exemption.

2. Created a GRAT—a Grantor Retained Annuity Trust. (See “GRAT Note” at the end of this article for more detailed information.)

Result: Using a GRAT—perhaps the biggest lever in the Wealth Preservation Game—George would avoid using a significant part of his $5 million lifetime gift tax exclusion, and would still give almost 50 percent of the company to his children.

Through wealth preservation planning performed well in advance of George’s exit George was able to:

Transfer one-half of a business with a fair market value of $9-$12 million to his children in four years (a timeframe George chose) using little or none of his lifetime exemption.
Receive all of the cash flow from the company during that four-year period, because the annuity payment to George was designed to equal the amount of cash flow expected from the stock transferred into the GRAT. And George needed this income to achieve his financial security exit objective.
Transfer (after four years, or at the termination of the trust) the trust asset (one-half of the company) to trusts for his children, completely free of any gift tax.

George had established these trusts when he created the GRAT to carry out his wishes regarding when, and if, his children would receive money from those trusts.

Techniques such as GRATs and the careful use of minority discounts (as well as many other estate tax avoidance techniques), only work as intended if they are put in place well before you exit your business. These techniques also work well when two objectives, in this case George’s financial security and his desire to provide for his family, must be achieved in tandem.

If you wish, we can provide you with additional information about transferring wealth to children and/or protecting as much wealth as legally permissible from unnecessary taxation.

GRAT Note:

We provide here additional details about how and why a GRAT can help to achieve an owner’s twin objectives: the need for financial security and to provide for one’s family.

A GRAT is an irrevocable trust into which the business owner (and the Trustee of the GRAT) transfers some of his stock. The GRAT must make a fixed payment (annuity) to the owner each year for a pre-determined number of years. At the end of that period, any stock remaining is transferred to the owner's children.

Stock transferred into a GRAT is treated as a gift. The amount of that gift is the value of the asset transferred minus the present value of the annuity that the owner will continue to receive. (George's advisors made sure that the present value of the annuity paid out over four years almost equaled the value of the stock transferred into the GRAT. In doing so, George made only a nominal and non-taxable gift.)

The key to a GRAT's success is to transfer to it an asset that appreciates in value and/or produces income in excess of 120 percent of the federal mid-term interest rate, which fluctuates monthly.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

5/10/16 5/10/16

What To Expect From A Buyer

Assuming that all business owners (except for those forced to liquidate) will eventually sell or transfer their companies, we often focus on what it takes to be a well-prepared seller. Setting exit objectives, planning to minimize the income taxes on the ownership transfer, building business value and selecting a skilled Team of Advisors are some of the most important items on any “Savvy Seller Checklist.”

But what about well-prepared buyers? What does one look like and why, as a seller, should you care?

First, once you put your company on the market, you must be able to recognize a “serious” buyer. No one likes to conduct an extensive courtship only to be stood up at the altar. Business owners are no different. They want a serious buyer—one who will be able to close the deal.

Characteristics of Well-Prepared Buyers

They Know What They Want.

First, owners should look for a buyer who has clearly defined objectives. Will your company be a standalone acquisition or part of an industry consolidation? Will the buyer build-and-hold or flip your company? Serious buyers know what they want and aren’t just “looking for a new opportunity.”

They Travel In A Pack.

Second, well-prepared buyers have teams of advisors knowledgeable and experienced in the acquisition process. They are too smart to attempt to fly solo through the sale process. They know that if they try to handle the transaction themselves, the probability of closing greatly diminishes. Ultimately, do-it-yourself buyers can be a waste of your time.

They Know What’s In Their Wallets.

Third, serious buyers know what kind of financing they can secure. They've already communicated with their lenders and are poised to move forward.

They Understand Win-Win.

Fourth, well-prepared buyers are not myopic. They know that the only “good deal” is one in which everyone wins.

They Are Grown-Ups.

Serious buyers have been around the block a few times. They know that the road from the initial meeting to the closing table can be full of twists, turns, peaks and valleys. They have stomachs strong enough to endure the ride.

They Run In the Fast Lane.

Once the deal process is underway, an owner can look for several other characteristics. Well-prepared buyers can move quickly to closing. Their preparation, Team of Advisors and understanding of the process eliminate many of the obstacles novice buyers encounter.

They Know Their Place.

Serious buyers understand their role in the deal process. They let their advisors negotiate the nitty-gritty deal points so that they can maintain a relationship with the seller as well as their credibility and professionalism at all times. They are well aware that today's seller may be tomorrow's key employee.

Trading Places

Now that you can spot a prepared buyer, don't be surprised if you have to become one. As you prepare your company for eventual sale, you may need to acquire other businesses as means to achieve “critical mass.” In other words, you may have to buy smaller (or similar-sized) businesses so that your company is large enough to attract qualified cash buyers. Before you become a seller you may have to walk a few miles in a buyer's shoes.

We are happy, as always, to assist you with all of your planning needs, including those involving the preparation of your business for a sale or a purchase.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

4/21/16 4/21/16

Characteristics of Bonus Incentive Plans

Too often, owners only discover that the compensation plans they've put in place for key employees are sadly inadequate when those key employees leave their companies for greener pastures. The departure of one or more of these key employees not only complicates your daily business life, but it can slam shut the door on your exit plans. Without experienced management in place, you may find it very difficult (if not impossible) to leave your business in style.

Key employees are aptly named not only because they are key to the efficient and profitable operation of your business; they are also key to your departure. No one will want or be able to run your business without you, unless key management remains after your departure.

How then does an owner manage to keep key employees on board? Rather than tie them to the mast, many owners install Employee Incentive Plans that motivate them to stay. In doing so, owners also work to achieve the goal of ensuring their successful exits.

We have identified four characteristics common to successful bonus plans. They:

 Are specific, not arbitrary, and are in writing

 Are tied to performance standards

 Make substantial bonuses

 Handcuff the key employee to the business

Let's look at each briefly.

Clear Communication

The most basic characteristic of a successful plan is that it is communicated clearly by the employer and understood thoroughly by the employee. Therefore, successful plans are in writing and are based on determinable standards. To be successful, employees know that the plan exists and how it works. Plans are explained to employees in face-to- face meetings, often with the owner's advisors present to answer any questions.

Performance Standards

The second characteristic is that the Incentive Plan’s bonus is tied to performance standards. Owners often work closely with their advisors to determine which performance standards should be used—perhaps net revenues or taxable income above a certain threshold—for which employees. The standards of performance that the owner chooses must be ones that the employee's activities can influence and that, when attained, increase the value of the company.

Let's look at how one owner accomplished exactly that. Duke Manning was struggling to keep his renowned, yet temperamental, chef in line. Henri always wanted more money even though the profits of the restaurant, specifically the kitchen, were uneven. Since Chef Henri controlled both the food costs and the labor costs, Duke and his advisors designed an incentive plan to encourage Henri to keep both items in line, but not too low. Duke’s incentive plan worked as follows: If quarterly food costs were no greater than 26% and no lower than 22% (a range we once believed necessary to keep food quality high) Henri would receive incentive compensation equal to 1% of the restaurant revenues. Similarly, if quarterly labor costs stayed between 25% and 21%, Henri would receive another 1% or a possible total of 2% of the gross revenues. Duke determined that if the kitchen could not stay within these ranges, profitability or the reputation and quality of the restaurant would suffer. If the restaurant prospered, revenues could be in excess of $3 million and Henri could earn as much as $60,000. The result? Henri was motivated to increase revenues, because his bonus would increase while keeping costs and quality in line.

Substantial

Third, the size of the bonus must be substantial enough to motivate employees to reach their performance standards. As a rule of thumb, a plan should create a potential bonus of at least 30 percent of a key employee's compensation. Anything less may not be sufficiently attractive to motivate employees to modify their behavior to make the company more valuable.

Handcuffs

Finally, a successful plan handcuffs the key employees to the business. The goal here is to keep the employee with the company the day after, and even years after, the bonus is awarded. Owners typically use several techniques to create “golden handcuffs” for their employees. Recall Henri’s incentive. Because Duke wanted to keep Henri for the long term, Duke paid half of Henri's bonus to Henri as he earned it and deferred (and subjected it to a vesting schedule) the other half. Of course, if Henri left the restaurant before he was vested he would forfeit half of his bonuses. If you’re interested in learning more about this important topic, we have a host of other tools in our incentive plan arsenals to help you design a successful employee bonus plan that contributes directly to the success of your business exit.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

4/21/16 4/21/16

Looking for Financial Clues to your Exit Readiness

Where to start? Business owners who have not been through an Exit Planning process,

and many of them have not, are often unsure about how we begin and what information is

important. Whether you plan to transfer your business to an insider, sell to a third party or

simply retain your ownership indefinitely, demonstrating your company’s financial ability

through sound financial statements is a critical step in planning for a successful future for

your ownership interest. When you first meet with an Exit Planning Advisor, he or she will

want to determine your company’s current financial status, an assessment that involves

reviewing:

 Business tax returns for the previous two to three years;

 Current financial statements of the business; and

 Your personal financial statements.

Where to start? Business owners who have not been through an Exit Planning process,

and many of them have not, are often unsure about how we begin and what information is

important. Whether you plan to transfer your business to an insider, sell to a third party or

simply retain your ownership indefinitely, demonstrating your company’s financial ability

through sound financial statements is a critical step in planning for a successful future for

your ownership interest. When you first meet with an Exit Planning Advisor, he or she will

want to determine your company’s current financial status, an assessment that involves

reviewing:

 Business tax returns for the previous two to three years;

 Current financial statements of the business; and

 Your personal financial statements.

Does your Exit Planning Advisor need your company’s financial statements at your

initial planning meeting?

Yes. He or she will continuously refer to your financial statements throughout your

relationship, using them at first to get an initial, but still comprehensive, understanding of

your business. As you work through identifying your goals and objectives and then

evaluating potential planning opportunities, your advisors will use your financial

statements as one reference point to guide you through a planning process and refine

planning ideas and their expected impact on your business.

What are we looking for?

First, the company’s financial statements not only allow your advisor to understand your

current financial position, but enable him or her to effectively gauge what you have already

accomplished and what remains to be accomplished to create a successful Exit Plan. As

your advisor identifies areas in your business that need strengthening, he or she, either

alone or in collaboration with other advisors, can suggest and help you implement

strategies to create a positive cash flow trend or increase profits. The goal: to achieve

your overall exit objectives.

Second, your financial statements provide much-needed insight into what makes your

business tick and what criteria you use to base all of your financial decisions. For

example, your past decisions to increase/decrease company debt, invest in intellectual

property development or reduce inventory may tell your advisor about the state of your

business, your industry or your strategic plans.

Third, and most importantly, financial statements provide cash flow information which we

can use to determine both an estimate of the value of your company and its possible sale

price. Financial statements show you and your advisor the historic earnings, cash flow

results and past years’ trends.

Historic results and trends can be indicators of your company’s future performance. Your

advisor should work closely with you to understand how those results and trends are likely

to affect the future. In short, we need this information to estimate what you can

reasonably expect to receive in total value as a result of your ownership interest leading

up to and through your eventual exit.

Unrealistic…Who me?

Finally, reviewing your financial statements with your advisors will help to dispel any

misconceptions you may have about your company’s value and the likelihood of growing

value. For instance, you may believe that recent improvements will double cash flow and

company profits over the next couple of years. Your advisors, however, will also look at

your company’s historical trends to determine whether past cash flow activity supports

your belief.

In short, the starting point for sound Exit Planning begins with reviewing well-prepared

financial statements.

If you have any questions about the importance of financial statements in the Exit

Planning process, please contact us to discuss your particular situation.

The information contained in this article is general in nature and is not legal, tax or financial

advice. For information regarding your particular situation, contact an attorney or a tax or

financial advisor. The information in this newsletter is provided with the understanding that it

does not render legal, accounting, tax or financial advice. In specific cases, clients should

consult their legal, accounting, tax or financial advisor. This article is not intended to give

advice or to represent our firm as being qualified to give advice in all areas of professional

services. Exit Planning is a discipline that typically requires the collaboration of multiple

professional advisors. To the extent that our firm does not have the expertise required on a

particular matter, we will always work closely with you to help you gain access to the resources

and professional advice that you need.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

3/23/16 3/23/16

Loss of Key Talent - You The Owner

Three issues confront a company whose owner dies or becomes disabled prior to a planned exit:

1. Continuation of ownership;

2. Company’s loss of financial resources; and

3. Company’s loss of key talent—you, the owner—and the cascading affect on employees and customers.

Today let’s look at how the loss of an owner affects both sole-owned and co-owned businesses.

Three issues confront a company whose owner dies or becomes disabled prior to a planned exit:

1. Continuation of ownership;

2. Company’s loss of financial resources; and

3. Company’s loss of key talent—you, the owner—and the cascading affect on employees and customers.

Today let’s look at how the loss of an owner affects both sole-owned and co-owned businesses.

Problem for Sole Owners. Your death will likely have the same impact on your company that the death of any one of your key people would have. Your talents, experience, relationships with customers, employees and vendors may be quite difficult to replace (especially in the short term).

Once you are gone, expect employees to jump ship unless you’ve made careful contingency plans. Without employees, your company is likely to default on its contractual obligations. Without planning few businesses have the financial resources or successor management to weather this storm.

Problem for Co-Owners. Multi-owner companies experience the same losses as solely-owned companies, if the remaining owners do not have the experience or talent to replace you. If you are the person who generates new clients, heads operations or maintains most of the company’s key relationships, your death or disability will, at best, jeopardize your company’s survival.

Solution for Sole Owners. Sole owners should create written stay bonus plans to motivate their key employees to remain with the company after the owner’s death. Additionally, you should create a succession of management plan that names the person who will assume your duties. Finally, you should decide now how you want your company to be preserved. Do you want the company to be sold, continued, or liquidated?

Solution for Co-Owners. If your co-owners do not have the skills and experience to replace yours, you must put in place a plan to give them the skills and experience they lack. If your employees are confident that the surviving owners have the skills necessary to bring in new business, run the operations or maintain key relationships, they are less likely to jump ship.

Certainly, business continuity requires cash—usually in the form of life insurance proceeds. But continuity requires more than cash. Your company will need to fill the talent void created by your departure. To do that, you must encourage (perhaps with cash through a stay bonus plan or perhaps through the offer of ownership) existing management to stay. If your business does not currently have, in place, management capable of assuming the reins, you must make it a priority to find and hire that management now.

If you would like to discuss how you can go about managing your company’s continuity, please contact us.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. ExitPlanning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

2/17/16 2/17/16

Bonus Incentive Plans for Employees: What's the Point?

When we ask business owners about the possibility of installing an employee incentive plan, we often hear one of two responses:

“I would like to do something to reward my key employees for their performance.” OR
“You know, one of my best employees left last week for a company for more money. I think I'd better do something to stay competitive in the marketplace. ”

May I suggest that these two motives are not nearly self-serving enough? The purpose of installing a bonus plan for your employees is to motivate them to help you pursue your goals.

When we ask business owners about the possibility of installing an employee incentive plan, we often hear one of two responses:

“I would like to do something to reward my key employees for their performance.” OR
“You know, one of my best employees left last week for a company for more money. I think I'd better do something to stay competitive in the marketplace. ”

May I suggest that these two motives are not nearly self-serving enough? The purpose of installing a bonus plan for your employees is to motivate them to help you pursue your goals.

While owners differ about when they want to leave or how they wish to leave, or even whether they want to leave their companies, the underlying goal is consistent: whatever the ultimate departure – be sure to leave in style. No matter what type of employee incentive plan you create, it should be designed to support your fundamental goals by motivating your key employees to stay with your company and help build its value.

Consider the following realities:

Some owners may rarely take an extended vacation much less cut back on their ongoing involvement without leaving capable management in place to run the business.
A sophisticated buyer may not seriously consider your company if it lacks a good management team;
You may, at some point, entertain the idea of selling the company to key employees; and
Transferring a business to children can be especially risky in the absence of key employees who will remain with the new owners.

Whether your goal is to sell to a third party, transfer the business to children or to employees, or to retain ownership long-term, the success of your strategy may depend on the presence of motivated, high-performing key employees.

We measure the effectiveness of an employee incentive plan in part by how well it motivates key employees to increase the value of a business. Effective plans necessarily reward employees as they increase the value of the business.

Usually, this means that owners must develop an incentive formula that links increases in the key performance indicators of the business to the employees’ rewards. In its simplest form the incentive plan gives the key employee a bonus. In designing a strong incentive plan, consider the timing of the bonus that creates the best incentive. You may want to consider designing a bonus program with an additional incentive for key people to stay with your company – a “handcuff” of sorts.

Let's look at how one owner set up his company's incentive plan.

After meeting with his advisors, Mel Houston decided to give two of his key employees 30 percent of the company's pre-tax income above $100,000 (the company's historic performance level). After Mel installed this plan, the company's pre-tax income increased to $300,000 so his key employees shared 30 percent of the excess income ($200,000) or $60,000.

Because Mel wanted to retain his key employees over a long period of time, he decided to pay half of this bonus after the company’s year end, and subject the other half to a non-qualified deferred compensation plan with vesting over several years.

Mel's plan (like yours should) provides that as the cash flow of his business increases (and thus the value of the business increases), he rewards his key employees accordingly. In doing so, both he and his key employees attain their goals.

Notice that Mel does not have to reach into his own pocket to pay the bonus. Instead, he is merely sharing a portion of the growth that they create. You may also notice that Mel benefits in two ways from the increase in income. First, he shares in the increased income and cash flow. Second, the value of his ownership interest most likely increases by some multiple of increased cash flow.

Keep in mind that the formula you create for your company can and should reflect the specific characteristics of your business. The head of the sales department might be rewarded for increasing the adjusted gross profit margin. A chef in a restaurant might be rewarded for reducing food costs (without affecting the quality of the meals served). Whatever factor you identify as a key to increasing the value of your company can be incorporated into your key employee incentive planning.

If you would like to discuss your options for installing employee incentive plans to support your goals, please contact us. We can collaborate with you and your other advisors to develop a customized incentive plan tailored to your business and your future.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

2/15/16 2/15/16

Creating Value in Your Business to Get Top Dollar When You Leave It

Did you ever wonder why one business has buyers lined up willing to pay top dollar while another sits on the market for months, or even years? What do buyers look for in a prospective business acquisition?

There are many opinions about what attributes or characteristics buyers seek, but here’s what we know: the characteristics buyers seek must exist before the sale process even begins and it is your job as the owner to create value within your business prior to the sale. We call characteristics that impact value “Value Drivers.”

Walk A Mile In A Buyer’s Shoes

To get an idea of the importance of Value Drivers when preparing to sell your business, it is important to put on the buyer’s shoes for a minute. Let’s look at a hypothetical case study that illustrates how a buyer might compare two similar companies with a different emphasis on Value Drivers.

The A Factor Company has EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $2 million, an owner who runs the business and the systems and processes that create growth. The A Factor Company doesn’t have a real management team in place and the owner generates a majority of its sales. The owner is the center point of the company, holding both the CEO and CFO positions. With this level of responsibility, the owner is burning out quickly.

In comparison, The B Factor Company also has EBITDA of $2 million and a solid management team that runs the business, systems and processes. The management team creates efficiencies within the business and the owner vacations for six weeks a year.

If you were a buyer comparing these two companies, which would provide a more attractive business opportunity? How much more would you pay for a business with a strong management team (one of the most important Value Drivers)? Would you even be interested in buying a business whose management team (the owner) walks out when you walk in?

Investment bankers understand that companies that lack strong Value Drivers also lack a bevy of buyers. Those buyers that do come to the table do not arrive with pockets full of cash.

Let’s look at several of the more important Value Drivers common to all industries:

A stable and motivated management team. If you can wait a year to sell your business, we suggest that you consider an incentive compensation system, cash or stock-based, that rewards key employees as the company performs (usually measured by increases in pre-tax income). Sophisticated buyers know that with a solid management team in place, prospects are good for continued business success. Without a strong management team, it may be very difficult to sell your business to a third party or transfer it to an insider.
Operating systems that improve sustainability of cash flows. Operating systems include the computerized and manual procedures used in the business to generate its revenue and control expenses, (i.e. create cash flow), as well as the methods used to track how customers are identified and how products or services are delivered. The establishment and documentation of standard business procedures and systems demonstrate to a buyer that the business can be maintained profitably after the sale.
A solid, diversified customer base. Buyers typically look for a customer base in which no single client accounts for more than 10 percent of total sales. A diversified customer base helps insulate a company from the loss of any single customer. If the majority of your customer base is made up of only one or two good customers, consider reinvesting your profits into additional capacity that will make developing a broader customer base possible.
A realistic growth strategy. Buyers tend to pay premium prices for companies with realistic strategies for growth. Even if you expect to retire tomorrow, it makes sense to have a written plan describing future growth and how that growth will be achieved based on industry dynamics, increased demand for the company’s products, new product lines, market plans, growth through acquisition, and expansion through augmenting territory, product lines, manufacturing capacity, etc. It is this detailed growth plan, properly communicated, that helps to attract buyers.
Effective financial controls. Financial controls are not only a critical element of business management, but they also safeguard a company’s assets. Effective financial controls support the claim that a company is consistently profitable. The best way to document that your company has effective financial controls and that its historical financial statements are correct is through a certified audit or perhaps a verified financial statement by an established CPA firm.
Stable and improving cash flow. Ultimately, all Value Drivers contribute to stable and predictable cash flow. It is important, especially in the year or so preceding the sale of the business, that cash flow be substantial and on an upswing. You can begin increasing cash flow today by simply focusing on ways to operate your business more efficiently by increasing productivity and decreasing costs.

You can install these Value Drivers and better position your company to secure a premium price upon your exit with the help of a trained Exit Planning Advisor.

In future articles, we will look at the most common Value Drivers in more detail.
If you have any questions about increasing the value of your business prior to your exit, please contact us to discuss your particular situation. We can help you identify and strengthen the current Value Drivers in your business, install additional Value Drivers, and create a road map to meet your overall exit objectives. We also have additional resources that explain Value Drivers in more detail and help you apply these concepts to your business.

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.