This could be the perfect time to start the process of transition out of your company say’s The Transition Companies. Selling a company properly is a “process” and not an “event.”

“Are you thinking about the possible “transition” out of your company?” ask’s The Transition Companies. Now might be a good time to start; as it often takes a year or more to find just the right buyer. Selling a business is thought by many to be an “event” that happens similar to the sale of a house and then we move on. However, the best way to sell is to think of selling as process or a gradual transition from one step to another until the deal is done. Consider the following offered by the Executive Team at The Transition Companies:

Capital Gains Taxes Rates

Among the many reasons why you would be wise to start the exit process sooner than later is the Capital Gains Tax story. Many think that capital gains taxes are likely to increase soon. Federal capital gains taxes were reduced from 28% then to 20% and at last to 15%. Given the current climate in the White House, it is quite possible, some say, that the capital gains tax will increase. This means that you will need to sell for a lot more to net the same amount.

Interest Rates Will Rise

Buyers tend to pay more when the cost of money is low. Lower interest rates make growth by acquisition a more attractive option than organic growth. A higher sale price and modest capital gains taxes add up to more dollars in the sellers pocket.

Buyers Are Still Plentiful

We know at The Transition Companies that Private Equity Groups are major players in the M&A market. They have lots of cash and are searching for businesses to buy. Many are paying top dollar and are leveraging their purchases to the hilt.

Consider the Baby Boomers

Baby boomer business owners are just now beginning to think about exiting. It has been said that possibly 80% of business owners are thinking about selling, and about 70% in the next three years. Competition will be keen for attractive buyers. You will need to offer a more attractive opportunity in the future to even be on the radar screen of the most desirable buyers once Baby Boomers start the transition of their companies to new ownership.

Are you prepared?

Many business owners think that they are well-prepared, but an outside independent third party or a buyer might disagree. Start working on your comprehensive exit plan. It could take as much as three to five years to get your personal and business house in order. To maximize the net after tax dollars you walk away with, prepare now so you can exit for top dollar while market conditions are optimum. If you do not prepare properly, you might find that you missed the opportunity of your lifetime.

A neat and orderly transition always includes three phases:

1.    A certified and accredited valuation, an executive summary of the company and an offering memorandum to put in front of buyers. There needs to also be an analysis of the strengths, weaknesses, opportunities and threats that face the company. This is called a SWOT analysis by some.

2.    An aggressive and pro active marketing campaign ending with multiple buyers bidding for the company. One buyer is no buyer. You should have your company in front of 100 to 300 potential buyers.

3.    A carefully planned due diligence process. The buyer must do it, but you must be in control of the way it is conducted. The Letter of Intent that starts the due diligence process must be done just right.

If you start early, plan wisely and get professional help if at all possible, you will transition out of your company with more money in your pocket.

Richard D Parker

Executive Director

The Transition Companies

Almost all news you hear or see today is about the downward economy. People are losing jobs, the price of gasoline is skyrocketing; and then there is the dreaded “R” word, Recession. As a leader, you are supposed to be upbeat and optimistic about the current economy. No matter where you go someone will ask you how business is because it can be one of the barometers for the economy. You try to explain that you have no crystal ball and you have no idea how the market is relative to your community, and you do this all with a happy face. After all, they may be a potential buyer. You then casually ask how their business is and they may say, reluctantly, they wanted to buy a widget today but the economy feels sluggish and, they’re just not sure about anything. Perhaps they will just save their money. They have a look on their face like they did you a favor by not purchasing a widget today! As they walk away they say thanks for your insight into the economy, you may have saved them from investing in a widget, of all things. No sale today, maybe after the elections, inauguration or the New Year.

In that very moment you wish that conversation had never come up and long for the good old days when the news was lighter – when people felt confident enough to want and purchase a new widget. How can you not talk about the economy? How can you keep a positive attitude when the economy stinks?

Sound familiar and painful? You know you need a positive spin to rev up your sales team who are wondering how to meet their goals in such a dismal economy. After all, they have had the same conversations with each other on your showroom floor. You may even have a little doubt in your own mind. If only you could just avoid the whole situation, maybe it will all be different tomorrow.

STOP IT NOW! Stop talking about the economy! Stop telling people that business is slow. Stop all the negative whining about the economy. JUST STOP IT! The more you dwell on your perceived observation of the economy the more you look for proof you are right. STOP IT NOW!

Below are four keys to creating a positive and prospering market around you.

1. Focus on what you want. If you focus on the potholes while you are driving, you’re going to hit the potholes. Instead, focus on a way around the potholes. When you’re talking to your staff or customers, indicate business is great and now is the perfect time to buy. Never talk about how tight money is for you (or anyone else, for that matter). Words trigger pictures that create emotions. How do you think people will feel if they hear the boss talking about how bad things are? You, as the leader or a team player, should talk about success and how great it is to work in a winning business.

2. Create a perception of value. Would you trade me a one-dollar bill for my twenty-dollar bill? It may be a good deal for you, but is it a good deal for me? It is if I perceive the value of a one-dollar bill is worth more than the twenty. Let’s say I’m dying of thirst and the bottle of water requires a one-dollar bill. Then yes, it is a great trade. Your job is to create value now that helps customers feel good about their purchase.

3. Create a positive environment. The only place you talk about the slow economy is with your competition. Let them believe that the market is bad if they so choose. However, you want people to feel good when they are in your house. So, take charge and a build strong belief in your people and yourself that you can prosper in any economy because you have the best team, the best product, and the best location.

4. Plant encouraging and positive ideas, discard negative ideas. Read positive material or listen to inspirational CD’s – in other words, work on putting positive thoughts in your head. And, if you must watch the news, the second it is over say to yourself (out loud is even better), I am thankful that business is great at my place.

You might argue that I don’t know how tough it is for you or what its like where you live. You’re right. But, I have traveled all over these great United States and I have seen hundreds of people just like you, and they are winning. Every day I see people who know that no matter what is going on in the marketplace, there are many ways to win in this economy. You have a choice each day as to how you will face that day. Your choice is either one of adversity or prosperity. People who start the day with a prosperity mindset automatically think of creative ways to outsmart the market. People with a prosperity mindset look for ways to inspire people to go where they did not think they could go. Leaders with a prosperity mindset see the obstacles as an opportunity to win when others might see only doom and gloom.

Posted by The Transition Companies