Jeff Janes
Sagemark Consulting @ the Loews-Vanderbilt Plaza
2100 West End Avenue, Suite 800
Nashville, Tennessee
615.750.0200 | Jeffrey.Janes@lfg.com
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Internal Deals

Owners of private companies generally have family members and non-related executives or managers involved in the business who become beneficiaries of the owner’s surety plan. In fact, 90 percent of domestic private companies are family-owned. And in many cases these key people serve as the market through which an exiting owner will attempt to sell or transfer his business.

  • Are my successors capable of running an entire organization, or just their department?
  • Will my key people be retained by the new owner/owners?
  • Can I ease the “purchase burden” for my family or key executives without unduly penalizing myself financially?
  • Is fair always equal, and is equal always fair when family is involved?
  • If my heirs are assuming control, how much “skin in the game” should they have?

Objective analysis is difficult for anyone when emotions are so closely tied to an event like a business exit. A significant first step is to determine where you fall on the Business Exit Readiness Index.

 

External Deals

If you don’t have a key person, family member, or co-owner who will ultimately serve as your buyer, then consider an outside sale one potential strategy. Return expectations are low for low risk assets, but small and middle market businesses are expected to deliver strong returns. The higher you go on the risk spectrum, the more an outsider may expect for their investment.

  • If you looked at your earnings over the last three years, how would they compare?
  • Are you able to look at our business as an investment, rather than a job?
  • Is it growing, and why?
  • How many hours a week will someone want to spend tending it?

The less time you are required to spend running the business, the more value you can potentially add to the sale price. Take our Owner Dependence Survey to see how your business may be viewed by outside investors or buyers.