How to Prepare an Exit Strategy – and Why! – in Just 7 Minutes with Arnie Hendricks

Podcast: Play in new window | Download (Duration: 10:06 — 3.1MB) | Embed

Related Links and Resources:

I got a page on my website from www.financialmanagementresources.biz, that offers up 3 different assessments; traditional readiness assessments.

Summary:

Arnie Hendricks of Financial Management Resources has been coaching and advising business owners as a part time CFO for 29 years and has served over 350 companies.  Prior to establishing his consulting practice, he had two five-year stints as a CFO for $30M to $50M manufacturing companies. 

The Certified Management Accountant (CMA) designation Arnie earned early in his career has been supplemented by becoming a Certified Family Business Coach (CFBC) and a Certified Exit Planning Advisor (CEPA).  He is also a Certified Mergers and Acquisition Advisor (CM&AA).  These credentials enhance his practical finance and operations experience to help a business owner through their once in a lifetime process.

Here are the highlights of this episode:

2:31 Arnie’s ideal Client: The ideal client would be a business owner that's thinking about transitioning in the next 5 to 10 years. Typically, that's somebody that perhaps reached the age of 60 to 65 and thinking about retirement and changes. And they realized that they got to do something with the business that they built over their career. Sometimes, it's somebody in their 40's or 50's that has been in the business for 20+ years and is ready for another challenge or is ready for an early retirement and looking on towards the next project might be.

3:18 Problem Arnie helps solve: The real problem is, they really don't know how to reach that objective of transitioning their business, because as you mentioned earlier, they only do it one time. And anything that we do for the first time, we usually don't do it as well. So, then don't typically perhaps get the value that they could maximize if they took an earlier start. Potential owners, sometimes if they let their kids or the management team take over the business, it's a process of getting them ready. Because they need a leader, not just managers. There's a variety of complex things that need to be addressed which are unique in every business.

4:17 Typical symptoms that clients do before reaching out to Arnie: It might be just a matter of losing enthusiasm for the business. Might be a concern that typically a business is 75% of a business owner's net worth. They start to worry as they get closer to retirement, are they going to be able to get the value out of the business, and just a lot of uncertainty that they need some answers to.

5:00 What are some of the common mistakes that folks make before finding Arnie and his solution: A lot of times the wait is way too long; they're action-oriented people and they've able to solve lots of problems with their businesses. And so, they think they can fairly do this at a very short time. In reality, it can take 3 to 5 years to really meet their objectives and maximize the value. In proper expectations, they've talked to people about the value of the businesses that they've solved, may or may not be right, maybe a totally different business.. software business versus manufacturing business. A lot of times they don't have their personal financial house in order. Because if they're going to sell their business, they need to make sure it's another personal financial plan. And then just making sure they reach out to the right team of advisors; their CPA, someone like myself that's in the business. Just continue to learn and surround themselves with people that can help them be successful.

6:14 Arnie’s Valuable Free Action (VFA): My suggestion would be just to give me a call and talk it through, just to begin the conversation. And another one would be just do some reading; read lots of information available just to start to understand and get some knowledge about the process. There's a lot of websites that identify the key things that they need to be working on.

6:59 Arnie’s Valuable Free Resource (VFR): I got a page on my website from www.financialmanagementresources.biz, that offers up 3 different assessments; traditional readiness assessments. And it's really identifying the issues where they scale from 1 to 5 both from the transition issues as well as the evaluation issues. Because of the fact that a lot of times, it's kind of like selling your house. You have your roof clean, you got a new paint job, you want your yard cleaned up. The things that you can do to substantially make your business more sellable and more valuable. And it's good to be working into your business plan as you go through the process. Those assessments identify some of those weak spots that they can start working on.

8:06 What are the key factors that I should consider as far as when to sell my business? That's something that when people get busy in their business and prior to the pandemic, life was pretty good, business was good, profits were good, distribution was good. But what they need to think about is at least three things; one is what are the economic conditions. For example, to sell the business now compared to a year ago would give you two different evaluations and different set of buyers. So, you want to make sure that timing is right in your particular business when that evaluation is maximized as well as the market for it. Another is the business conditions. A lot of times people allow their business to stagnate or begin declining when they want to sell. They don't realize that people are buying the future, they're not buying the past. You really want to sell your business when it's doing well and the future looks really bright because you're going to get a higher price and people are going to be interested in it.