There are two major themes we hear a lot about regarding Baby Boomer business owners — they created huge numbers of private companies in the last 50 years, and there is a massive wave about to roll over us as aging Boomers need to sell their companies and retire. What is rarely discussed, however, are certain tendencies of that generation which, more often than not, threaten to destroy the value they’ve created.
There are plenty of value-destroying traps Boomers repeatedly fall into, and we roll these up into three major mistakes. Unfortunately, most Boomer owners are guilty of all three.
- Holding on too long
- Failure to transition from founder to CEO
- Blindness to the market’s point of view
There are inevitable situations for every business owner when the value of the company becomes a critical issue. Unfortunately, few are prepared to make a compelling case for premium value when the moment arises. Most owners spend their career focusing on revenues and managing operations, naturally assuming that greater sales and profits correspond with a growing valuation. But it does not always happen that way. Value is a complicated concept, and building a compelling case for value takes deliberate positioning of the company. And it takes time. It is too late to affect value if owners wait until the last moment before raising capital or selling. Read More
The idea of selling a company—the embodiment of the owner’s will and character—is a daunting challenge. Every business owner I know cares deeply for his company. He has sacrificed mightily for the business over the years. In the early days he probably went without pay, sometimes putting his own children in hardship because employees’ payroll came first. If the company borrowed money there is a good chance the owner has pledged all his personal assets to support the loan. The products, the systems, the team – the owner has poured himself into every bit of it. It bears his stamp, his mark, his character. To turn a life’s work over to a new owner is a deeply personal and challenging decision. Read More
We hear all the time of extreme valuations that are awarded to certain companies in a merger or sale. The common wisdom is that we are all takers of market value and that private company owners have no control. Is it possible, however, to be a maker of your own valuation? I have no doubt that it is. Companies that win the highest valuations have planned, executed, obsessed over details and positioned themselves for such an outcome. The good news is that any business owner can drive significant appreciation by deliberately pursuing a course to position the company for maximum value. Read More
One of the truly enjoyable parts of our job is working with business owners as they rediscover their passion for their companies. I can’t tell you the number of times we started in an environment that felt like a funeral but ended up instead with a party. In many cases clients were ready to throw in the towel. They’d lost their love for their company. Their real dreams had long faded. And the entrepreneurial adventure had turned to drudgery. But then something begins to change as we help them explore strategies to re-position the company, to grow again and to add significantly to the value of the company. As we kick around ideas, talk of strategy and growth evolves into concrete plans and they begin to rediscover a part of themselves they’d long since buried. A hint of hope, a glimpse of sunlight begins to appear. The entrepreneur is reborn as plans are put into place—plans for restoration, resurrection. Read More
When selling a company, most business owners imagine they will have an auction and simply select the highest bidder. Pretty straightforward. And why not? They’ve worked hard, sacrificed and borne enormous risk for a large portion of their life. It’s time to harvest the fruits of their labor. Pick the highest bidder and move on, right? Not necessarily. Read More