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.
“George, would you like to double or triple your revenue, improve your corporate infrastructure and be a highly attractive company that could be sold in 2-3 years for a multiple of the current price?”
For George, that was not an easy question to answer. We were talking about taking a $10 million business to $20-30 million in just a couple of years. He had more questions than answers. So it took about three months of discussing this with him before he agreed.
What he agreed to was a joint venture between the two of us. We would work as a team, him as CEO and me as his trusted adviser, to create and implement a new business & financial plan.
We began in late October, 2012. I just got a text from him yesterday (January 4, 2015), 2 years and 2 months later. Sales for 2014 exceeded $23 million.
And better yet, we are in due diligence with a buyer who wants 70% of George’s business at a valuation that is more than triple the original deal.
I’m now looking for 3 more CEOs who want to be able to get their companies ready for a sale. Each company is different, and as a result, each company has a different need in order to maximize the value at a transaction. For some, like George’s company, it was getting the growth engine working again. He didn’t know how to do that, but with our help he doubled sales in just two years. For other companies it might be getting the right management team in place, clean up internal issues, or reposition the company so buyers will be more attracted.
This is what we promise to these 3 CEOs:
1. We promise to work with you as a trusted adviser to attain YOUR GOALS. We will spend a fair amount of time up front determining what you really want to achieve. For George, he wanted to work another three years and sell. After doubling revenues (and more than doubling earnings), he’s more excited about his business than ever before. Now he gets to sell 70%, remain CEO & own 30% of a business that can double again (yes, this can be a $50 million business).
2. I promise to use my 38 years of experience in advising both public and private company CEOs and my extensive Rolodex to help you get the results you want. For George, that meant arranging new banking relationships that gave him financing terms that even surprised me (we’re talking about long term financing at less than 2.5%).
3. I promise to make myself available if it will help you attain you goals. Have an important meeting coming up with the bank, your investors, a major potential client? We will schedule it so I can get on a plane and attend anywhere in the world. Want to have a weekly conference call? Done. Want to talk about something? Between cell phone, email & text, I’m almost never out of touch. George and I still probably talk 3-4x/week.
4. I promise to work with you so that for every $1 that your business pays me, you make an extra $10. I figure that a 10x return in a good ROI — well actually it’s an incredible ROI, but that’s what works for me.
If you are a CEO or business owner with at least $5 million (preferably $10 million +) in revenue, we need to talk. Email me at Jeff@JeffVillwock.com and let’s start the conversation. Make 2015 your best year yet.