Villwock Strategic Planning

Strategic Planning – Simple Template for Complex Issue

For many, if not most, middle-market CEO’s, Strategic Planning sounds worse than a trip to the dentist.

Regardless of what we conjure up when we hear the words “Strategic Planning”, this is a lost art for many business owners. It is lost in the busyness of the day. Yet it could be the most important step in getting a business ready to double or triple in revenues, profits and value.

Let’s take the mystery and pain out of Strategic Planning.  What is Strategic Planning?

Regardless of the textbook definition, we think of Strategic Planning as follows: Look at the products or services that we offer, the industry in which we live and the strengths and weaknesses of our management and employees. What business are we really in? What course of action do we need to take to get the business to the “next level”. The process must also help us determine what that “next level” is – or in other words, “what is the end game?”

For example, if we are a $10 million business in the widget industry, we might ask ourselves the following questions:

  1. How can we gain more customers buying our widgets?

selling your business

Thinking of Selling Your Business?

If you’ve built a good business as a CEO and are thinking that it’s time to sell – consider this question:   How are you going to get the company ready to be sold at the highest price possible?

Not being ready can cost you millions of dollars.

The fact is that most CEOs have never sold a business before – and for most CEOs, this is the most important financial transaction of their life.

And if you ask private equity buyers (and if they were honest), they would tell you that most of the companies they see are NOT ready to be purchased. Often they don’t mind, however, since that means that the private equity firm can buy the company for less than they would have paid otherwise.   In other cases the business is so NOT ready that they won’t even bid to buy the company, regardless of how attractive the industry sector or management team might be.

Either way, the current owner of the business loses.

A good example is a company that I’ve worked with for two years. We were hired to initially represent the company in a sale to a private equity firm which had knocked on their door.

super bowl interception

Super Bowl Interception – Poor Exit Planning

Ball on the 1 yard line.  A running back averaging over 4 yards / carry.  Less than a minute on the clock.

If you are a CEO/Owner, this situation describes YOU just before selling your company.  It is a ONCE IN A LIFETIME OPPORTUNITY.

Do you take the high risk approach – pass for a surprise touchdown?

INTERCEPTED and the dream of selling at an optimal price is gone.

It’s easy to be a Monday morning quarterback – or coach.  But there is something here to be learned by every CEO, every Board Member and every Business Owner.  The lesson is this:  Even the most experienced leaders sometimes want to risk it all when it isn’t necessary.

At the 1 yard line, the running back has multiple chances at success.  Could he fumble?  Of course, but what is riskier?  Letting a ball fly through the air or having an experienced running back tuck it away and blast through the line?

For most players, if they ever get to the Super Bowl, it is a once in a lifetime event — just like for most CEO/Owners, getting into a position to monetize the company they have spent years and decades growing is often a once in a lifetime event.

M&A Advisor

Do M&A Advisors Add Value?

Billy Fink, Marketing Manager at Axial just published a great article in LinkedIn entitled “M&A Advisors Proven to Improve Valuations“.

He states that advisors, 1) create competition in the sales process, 2) are more important in private transactions and 3) provide extra-valuation benefits.  And he is exactly right — a good M&A advisor should create far more value to the seller than the fee paid.

This opens up another area for discussion:  What is the proper role for third-party advisors when growing & ultimately selling a business?

You’ve probably met the CEO who insists that he/she can do the accounting, corporate legal reviews, raise money for the business, be the H/R director and find the right buyer for the business.  If you’ve met this person, you know that this CEO is wasting precious resources.  Even if the CEO is multi-talented, if doing the accounting is his/her best use of time, then the business has real problems.

Mr. Fink’s article hits a cord with M&A advisors.  I’ve met lots of CEOs who think they will “save money” by doing it themselves.  What typically happens is that business is never sold,

swiss franc

Swiss Franc … Why Should We Care?

Most people probably haven’t noticed, but the Swiss government did something extraordinary overnight.

During the last European crisis, money flooded into the relatively safe Swiss currency.  The Swiss reaction was to fix their currency to the Euro, which at the time helped prop up the Euro and stopped the rise of the Swiss Franc.  Switzerland is not part of the Euro currency club.  The concept was that if the Swiss Franc continued its sharp rise that Swiss companies would be penalized in the world market.  Their goods and services would become far more expensive in other currencies, most especially in the Euro zone, but also in America, Japan & China.

Alas, that move was reversed last night.

Why would the Swiss government suddenly and without warning reverse its decision to tie its currency & the country to the European Union?

Only one answer makes sense:  The European Zone has slipped back into another recession, despite the enormous worldwide “quantitative easing” — governments, lead by the United States, have flooded the world with money in an attempt to restart the growth engine of the world economy.

News flash:  It’s NOT working.

entrepreneurial ceo

Searching For 3 Entrepreneurial CEOs in 2015

Business Owner / CEOs who want to sell some or all of their business often have a problem.  Some CEOs are savvy enough to know they have the problem — most may never know, and that lack of knowledge will result either in failure to find a buyer, or in a purchase price well below what is possible.

One CEO (we will call him George) didn’t realize that he had a problem until after a failed attempt to sell his business.  We represented George as a sell side investment banking adviser.  He came to us with a buyer and our job was to advise him in the transaction.  Result?  We advised him NOT to do the deal – and he agreed.

Why would we advise NOT to do a deal?  After all, our fee is based on a transaction getting done!

Easy answer – the price & terms he was offered were much too low.  His business was not “ready” to be sold.  While he had a successful business, it had not grown in 5 years, fluctuating between $10-12 million in annual sales.

I asked him a simple question.