If you don't do anything different, what will life look like around here in 12 months?

[Editor's Note: We hear repeately from clients - "We should have done this last year"...or years ago. Many companies that have survived through the Covid-19 period have slipped back into "business as usual." What are you doing to make 2021 and 2022 better years? I hope you find this article though-provoking.                              -dpm] 

Procrastination is defined as "the action of delaying or postponing something." We all fall prey to occasional procrastination, feeling that we don't have enough information, hoping that the situation will improve by itself, or an employee will finally improve a problem behavior.

Do you see yourself or someone you know in the following comments: 

• We're doing as well as industry averages
• The rising tide floats all boats...for now
• Everyone's going through the same problems
• We identified this several times but we didn't follow-through
• He/She has been really trying to improve. Let's give him/her a bit more time.
• We're going to wait until we hire the new manager/director/CEO
• If we let that problem/under-performing person go, we'll never be able to replace them
• We have too much going on, to be able to tackle this now
• We're going to stay where we are ...for now

If we defer taking action or making difficult decisions, it seldom results in a better situation. Twelve months later, we are faced with the same situation, one that usually looks worse after 12 months of aging. If we keep repeating the same things and expecting different outcomes ... Well, we know what Einstein reportedly said about the definition of insanity. 

Business owners and CEOs typically know where the problems are. They may be frustrated because, while the issues have been raised previously, the solutions have not been implemented. Many times, having an experienced, objective outside party can be very effective in not only pointing out the obstacles or issues, but also in keeping the business owner/CEO and the organization focused on execution. 

Are you going to use the same approaches this next year or try something different? So...as you begin to move forward with your plans for 2021, are you going to approach it the same as you have in the past.

 

How has that worked? 

• Were you able to identify new opportunities or turns in the market?
• Were you able to embark on new initiatives that provide your company with new competitive advantages, or an improved cost structure, or an intriguing new business model? 

As you approach the midway point of 2021, ask yourself the question,  "If you don't do anything different, what will life look like around here in 12 months?" What will it take for you to "Decide to Go!"

The Mead Consulting Group is focused on helping business owners and CEOs identify and overcome obstacles to growth and profitability. In short, we help business owners and CEOs "think, plan, and act strategically." Contact me to discuss how to do things a bit differently this next year. 

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The Mead Consulting Group has been helping clients develop and execute Strategic Growth & Execution plans for many years. Check out our website for descriptions of some client success stories. 

Common misconceptions about selling a business

[Editor's note:  2021 is proving to be a big year for mergers & acquisitions. Private Equity firms and strategics have lots of capital to put to work. This eLetter, first published a couple of years ago, received such positive response that we decided to update it and run it again. -dpm ]

It appears that we may be entering the next big surge in business transition activity fueled by the retirement needs of aging baby boomers. The first baby boomers turned 65 years of age in 2010 and we are now in the years with greatest numbers of boomers who need to sell to provide liquidity for retirement.

If you are a business owner contemplating a sale somewhere in your future, consider these common misconceptions about selling your business:  

 ·     I know the buyer - they are in my industry.  Many business owners think they already know the prospective buyers – from their industry. However, in many cases where a sales process is conducted by an investment banker, an "outlier" (either a strategic or financial buyer) surfaces with an offer significantly higher than from those you may know. Many times these come from outside your industry.

 ·     The market will be better next year. Procrastination can cost you. Sellers in 1999 or 2007 will tell you that they wished they had sold while the market was hot. In 2021 and likely 2022, 2015 there are more buyers than sellers – this is unlikely to continue with the aging demographics of business owners. 

 ·     I don't want to sell until I have to --  (Dismal D's). You want to sell when your business is healthy and when you don't have to sell. Life can take cruel twists and turns. Business owners without a plan can find themselves subject to the "Dismal D's" - Death, Disability, Divorce, Dissenting Owners, Declining market, Debt overload, or just pure burnout. It is hard work to sell your business. You'll need plenty of energy and motivation to maintain performance during the sales process.

 ·     The investment banker or M and A firm will build value or help create my business strategy. No they won't - that's not their job! A good investment banker can help you yield value, attract a broader market of potential buyers and get a deal closed, but they don't have the skills or background to build value.

Danger point: Some small M and A firms will offer free or low cost strategic or operational services and advice in order to get your sales transactional business, but these are either young, inexperienced associates or people who have not really run a business like yours. They may be very good at selling your business, but what they don't know can hurt you. If an investment banker is offering to help you with your business strategy, you should question why. Stick to investment bankers that stick to their core competency - selling a business.

 ·     My lawyer (or CPA) (or Wealth Manager) will help me find a buyer. Finding a buyer is very different than finding the best buyer, the right buyer. Investment bankers do this every day. Most professionals understand what they do well....and what they don't. Find the right tool for the job!

 ·     I met a guy in my CEO peer group /My investors know a banking firm. Selling your business may be your most important business decision. Get help in making an informed decision about selecting an investment banker or other professionals such as accountants, tax counsel, and transaction attorneys. Learn about possible (but undisclosed) conflicts of interest, differences between firms, level of expertise that will work on your company, etc. Have you checked with previous clients that were both successful and unsuccessful? Mead Consulting clients use a checklist of questions to help make the appropriate choice.

 ·     It only takes 6-12 months to exit a business. Nothing could be further from the truth. In order to realize the maximum value it may take you 1-2 years to prepare the business, 12 months to do the transaction, and then you may have to remain for 3 more years with the company after the sale. Rushing a company to market without proper preparation will cost you as buyers will discount values for companies without an adequate strategic growth plan, strong management, or a clean review of due diligence issues.

 ·      Selling will only take some of my time. The biggest mistake business owners can make is to allow business performance to slip during a sales process. The primary reason for deals to either fall apart - or become heavily discounted - is deterioration of revenue and earnings. Business owners can dramatically underestimate the amount of time and energy it will take to both sell the business and maintain performance during the process.

The Mead Consulting Group helps business owners navigate through a successful sales process, including preparation (value creation), selection of the right team (investment bankers, transaction attorneys, tax counsel, etc.), and the sale process itself. We focus on maximizing value and leverage the business owner's and management's time so that they can focus on maintaining business performance. Contact us for more information.   

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The Mead Consulting Group has been helping clients develop and execute Strategic Growth & Execution plans for many years. Check out our website for descriptions of some client success stories.