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CEPA > Section 9: Exit planning deliverables > Flashcards

Section 9: Exit planning deliverables Flashcards

1
Q

What is a deliverable

A

A report, meeting, workshop, event that represents the conclusion of an assignment, step, stage, task or action.
It represents what the client is paying for
It leads the client to the next stage of work
Tees up the next assignment

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2
Q

Deliverable - Gate 1

A
  • Enterprise Value Assessment
  • Personal Envisioning Statement
  • Business Envisioning Statement
  • Team Education
  • Strategic Roadmap I
  • Strategic Roadmap II
  • Management Alignment
  • Metrics / Dashboard
  • Rhythm
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3
Q

Deliverable - Gate 2

A
  • Monthly 1:1
  • Monthly Team Accountability
  • 90-Day Renewal Workshop
  • Spin-off projects
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4
Q

Deliverable - Gate 3

A
  • Keep or Sell? workshop
  • Exit Options Analysis
  • Spin-off projects
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5
Q

Deliverable #1 - The Triggering Event

A

A business valuation correlated to a personal, financial and business attractiveness and readiness assessment to determine where the business value lands in the range of value

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6
Q

Benefits of The Triggering Event

A
  1. establishes, based on fact, your present value
  2. predicts the probability of succeeding with growth and transition strategies
  3. identifies your PROFIT GAP
  4. identifies your VALUE GAP
  5. identifies ACTIONS you can take to protect, build and harvest value
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7
Q

Actions in the Triggering event

A
  • recast tax statements to get to the real number
  • create a reasonable forecast
  • pull market data for - industry performance - recent trade multiples
  • determine the range of value
  • benchmark
  • score personal, financial and business value drivers
  • correlate scores with the business valuation and financial analysis and place in the range of value
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8
Q

Deliverables in the triggering event

A
  • a specific and qualified list of personal, financial and business strengths and weaknesses
  • correlated and used to justify present value and potential value
  • to establish a $ value with regard to what value enhancement is worth

Prioritized Action Plan

  • personal / financial actions
  • business actions
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9
Q

EBITDA

A

Earnings before interest taxes depreciation amortization

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10
Q

Recast EBITDA

A

normalized

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11
Q

Normalize

A 
Compensation factors
-Salaries
-Rent
-Bonuses
Discretionary Expenses
- homes
- cars
- boats
- travel
One Time Charges:
- Asset write offs
- sales write offs
- capital
- legal & accounting
- consulting
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12
Q

Scoring

A

Attractiveness Score

Readiness Score

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13
Q

Attractiveness Score

A

how good does the business look from the outside in

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14
Q

Readiness Score

A

how ready is the business to transition or scale

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15
Q

What is Readiness?

A

It is not the decision to sell or grow.
It is a state of fact, not a state of mind.

Two considerations:

  • is the owner ready?
  • is the business ready?
  • in the eyes of the current owner (“ugly baby”)
  • in the eyes of the new owner (premium or discount)
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16
Q

Common Readiness Issues (personal)

A

Personal

  • no goals and objectives
  • no consideration to “what next?”
  • no advisory board or formal transition team
  • no contingency plans
  • dated buy-sell
  • shareholders and/or family members not on the same page
  • forced generational transfer
17
Q

Common Readiness Issues (financial)

A

Financial

  • Income requirements post transition (i.e. standard of living adjustment needed?)
  • Needs vs. Wants
  • Financial plan does not consider the value of the business or overstated opinion of value
  • Net proceeds analysis. What you keep is what matters most.
  • Did not start tax planning soon enough
  • Risk sensitivity
  • Inappropriate portfolio allocation
  • Financial plan not aligned with personal plan
18
Q

Common Readiness Issues

A

Valuation - buyer vs seller

  • EBITDA (differences on calc)
  • multiplier (customer concentration, branding)
  • not bankable

Credibility of financial information

  • Audit, review, compilation
  • availability of interim information
  • forecasting (basis, accuracy)
19
Q

Common Readiness Issues

A
  • management / key employee retention
  • customer concentration
  • offer shopping / power to sell (ownership group or family at odds)
20
Q

Common Readiness Issues (Deal breakers)

A
  • Owner dependence
  • Lack of documentation
  • Lack of transferable and scalable systems and processes
  • product liability
  • EPA / Safety issues
  • lawsuits
21
Q

What are the benefits of being ready without wanting to sell?

A
  • pulls organization in the direction to be best in class
  • serves as a contingency plan
  • non-solicited offers do happen
  • increase in annual income and value

CEPA (18 decks)

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