Over the years, I have spoken to thousands of business owners and investors on the subject of buying or selling businesses. It has become apparent to me that there is a real need for business owners to better understand how to go about planning and managing their Business Exits. While there are thousands of books on the subjects of Mergers & Acquisitions (M&A) and corporate finance, these are generally aimed at M&A or finance professionals, not at business owners. This book is designed to fill that gap. Targeted to business owners, it covers both Business Exit Planning and Transaction Management.
This is not a textbook. It does not go into tremendous detail on any subject, but rather gives a bird’s eye view of what you, as a business owner, need to know to plan and execute your Business Exit. Entire tomes could, and indeed have been written about Management Buyouts, Initial Public Offerings, valuations, etc. But in giving very brief introductions to these and many other subjects, my goal is to give you enough information (in an easily readable format) so that you can decide for yourself whether a particular subject warrants further investigation.
The generality of this bird’s eye view is also reflected in the fact that I don’t analyze the subject of planning and executing Business Exits within the context of any particular legal jurisdiction. I will look at universal themes and issues, rather than provide a detailed roadmap for a particular company within a particular legal jurisdiction. It has been a challenge to give meaningful advice in the absence of the legal context in areas like tax or estate planning. Nevertheless, most of the content should be applicable to any country; but please, consult legal counsel and other advisors before taking any concrete action.
I have done my best to illustrate the principles set out in this book with real-life examples. I use miniature case studies, based on personal experience, throughout the text. The majority of these are in the context of Transactions or assignments carried out by my firm, Euro-Phoenix Financial Advisors Ltd. The case studies themselves generally don’t reveal sufficient information to identify the companies or individuals in question. Although our Confidentiality Agreements have expired in the majority of instances, we respect the confidentiality of our clients above and beyond the minimum legal requirement. In one or two cases where I thought the identity might be of particular interest, I obtained the consent of the company.
I do not claim originality for the ideas expressed in this book, as can be seen from the sources quoted in the Endnotes. What will be of use to you, as a business owner, is the bird’s eye view and the way in which the information is synthesized and illustrated with relevant case studies and a glossary of frequently used technical terms.
This book is designed for owners of what I would call ‘mid-sized’ businesses. These are typically businesses that have minimum values in the range of €10 million to €100 million, although I am the first to admit that this range is arbitrary. Businesses with values smaller than €10 million often resort to business brokers rather than corporate finance or investment-banking-type advisors. Some do not use advisors at all (other than lawyers) because the advisory fees would consume a large percentage of the Transaction revenues. It is particularly challenging for owners of such small businesses to obtain quality advice at a reasonable cost, given the size of the deal in question. This book is a good starting point.
Businesses with values larger than €100 million are at the other extreme: they typically have numerous investment banking or corporate finance relationships, and are usually more sophisticated in their corporate finance knowledge than small and mid-sized firms.
Part II of this book deals with planning your exit, whereas Part III talks about how to manage it. Just as planning the construction of a house takes longer and is not as dramatic or exciting as seeing the house grow before your eyes, so too, you will find that it may take some effort to work your way through the planning phase, whereupon you will be rewarded with a faster and better construction. I have built a number of houses, and have always found that the planning (architectural drawing, permits, etc.) takes two or three times longer than the actual construction itself. If you persevere and invest time to understand Part II, you are likely to achieve a better result with Part III.