Market-View

06/05/2020

Don’t Re-Build, Re-Create

As small business owners, we have choices to make about how we respond to the economic crisis caused by the COVID-19 pandemic. We can treat it as a disaster that is destroying our business, or we can consider this a pause in our business (albeit an unplanned, unexpected, and unwelcome one!). I challenge my clients to view this crisis as a pause or disruption in their business, not the destruction of it.

Most businesses I work with are privately owned, often by families, engaged in manufacturing, distribution, or service sectors. These owners have built strong businesses over many years of hard work and sacrifice, and they have a dream of exiting their businesses in the future and living the lifestyles that they choose. This can be achieved in numerous ways, including the sale of the business to an outsider, or transfer of the business to family members or other management.

If you and your business fall within the purview of my typical customer, I encourage you to attack this economic crisis as an opportunity. Use this disruption to make the necessary changes to your business so when the time comes, you and your business are positioned for an exit that achieves your ideal outcome.

When we are mired down navigating daily challenges and stressed by uncertainties about the future, it is easy to become led by our businesses rather than being leaders of our businesses. Now is the time to lead.

Think of this as the opportunity to “re-create” your business as opposed to “re-building” your business. These are similar but very different concepts. By re-creating your business, I’m suggesting that you make very focused improvements to your business as you ramp back up, rather than re-building your business to simply get it back to a pre-crisis state.

Where to Begin
1. Start with the end in mind. As business owners, the end is the time that we exit our businesses. Begin by painting your ideal outcome for exiting your business. Specifically, what are the financial and non-financial results that are necessary for you to achieve your goals for a successful exit transaction?

2. Analyze your business from the perspective of a buyer. It does not matter if your intentions are to sell your business or not. Understanding your business from the perspective of an outsider who is independent, objective, and critical is extremely important for any business owner. A thorough, deep-dive analysis of key financial and operational metrics of the business and industry reveals invaluable information to the owner. Key-value drivers and value detractors/opportunities for the business are highlighted through this process.

3. Connect the dots. With your ideal outcome (your endpoint) and a solid understanding of where your business is today (your starting point), you will then be able to form a strategic plan that highlights your strengths, eliminates your weaknesses, and re-creates your business to best serve your purposes as a business owner.

If you’d like to learn more about leveraging this time of business disruption to re-create your business and position yourself for a successful future exit transaction, please contact us. We’d love to have a confidential conversation to learn about your unique situation and show you how you can have an executable plan within 45 days.

Reach us at:

Market-View
Jay Carter
Founder and CEO
704-904-7543
[email protected]
www.market-view.com

As small business owners, we have choices to make about how we respond to the economic crisis caused by the COVID-19 pandemic. We can treat it as a disaster ...

06/03/2020

Consider 2020 Your Gap Year

This year is the best opportunity in more than three generations for business owners to step off the carousel of running our businesses and looking at our business and our lives from a different perspective.

Nothing is “normal’ right now and our focus and activities must necessarily be different. As small business owners, we’re doing the best we can to adapt to the current environment, but it’s easy to lose focus on the core reasons we are business owners in the first place. We’ve become so mired down navigating daily challenges and stressed by uncertainties about the future, it is easy to become led by our businesses rather than being leaders of our businesses.

For fellow business owners finding it challenging to focus on your big picture purposes for owning a business, I have a suggestion. The current period of disruption is the perfect opportunity to declare 2020 your “gap” year. Don’t waste energy trying to erase the damage your business experiences in 2020. Yes, you need to survive the crisis, but don’t get wrapped up on results compared to prior years; pour your attention and activities into creating value for the future.

Here is a very useful exercise for any business owner, particularly if you have thoughts of selling your business in the next 5 years. Use this extraordinary time to answer these three questions:

1. How would my business be viewed by a buyer today?
2. What is my ideal outcome for exiting my business in the future?
3. What should I be working on now to close the gap between today’s reality and my ideal outcome?

Allow 2020 to be the disruption, not the destruction, of your business. By taking time to review and refresh the core purpose of your business and your reasons for owning it, you will be in a stronger position of prioritize your decisions and focus your daily attention on the things that matter most to you. Providing this type of purpose-driven leadership will separate your business from your competitors and enhance its value in the future.

If you’d like to learn more about eliminating uncertainty and positioning your business for a successful exit transaction, please contact Jay Carter at Market-View. We’d love to have a totally free and confidential conversation to learn about your unique situation and show you how you can have an executable exit plan within 45 days.

Reach us at:

Market-View
Jay Carter
Founder and CEO
704-904-7543
[email protected]
www.market-view.com

Consider 2020 Your Gap Year This year is the best opportunity in more than three generations for business owners to step off the carousel of running our busi...

06/02/2020

What is an Exit Plan Anyway?
By Jay Carter

I am going to share a secret with you. If you are reading this article and are unsure what exactly an exit plan is, you are in excellent company. As I have shared in previous articles, through my research on the topic, I have found that depending on who you ask, you’ll get a different answer based on their own experience and point of reference.

If the question was, “What is a will?” or What is a lease agreement?” or “What is a tax return”, you would get pretty consistent answers, regardless of whom you ask. However, when the question is, “What is an exit plan?”, the answers will be all over the place. Lawyers focus on minimizing risk and estate issues. CFA’s look at accounting issues and taxes. CFP’s look primarily at financial resource planning and protection. Business brokers and M&A advisors concentrate on the value of the business and the timing of a sale transaction. The trouble is that while each of these activities is important to a business owner’s successful exit, none of them is an exit plan.

This is both understandable and confusing. Each professional naturally focuses on their area of expertise and, occasionally, on how they are compensated. But the truth is that it is none of these professionals’ primary role to help you understand and execute a plan to achieve your ideal outcome, so there is a lot of confusion for business owners.

Think of it this way. You want to go on a big trip to celebrate your 60th birthday. You and your partner have been looking forward to this 2-week European trip of a lifetime for years. You look through the travel books, talk to friends about where to go and what to see and watch a few documentaries on Netflix. You’re excited and begin to make plans. You may call a travel agent for help, or you may do some research online.

Planning for your exit from your business requires the same steps as planning for this trip. You should know where you’re leaving from and where you’re headed to. You should know how much you want to spend (or how much you need to receive for your business) before you commit to the trip. You should know exactly what you need to take with you, such as itinerary, tickets, valid passport, visas (requisite legal/financial/corporate documentation data and analysis), and you need a list of all the things you need to do to prepare for the trip.

You may have talked to your CPA or your attorney about your desire to sell your business sometime. You may even have set up a trust or a talk about tax strategies, but these are not exit plans. Just like calling Uber for a ride to the airport or making hotel reservations are not the same thing as plans for a trip.

Takeaway: Your trip of a lifetime will have a chance to be everything you dream it will be only if you do the requisite groundwork.

Your business is likely your largest single asset and planning for your exit cannot begin too soon. This is not about a two-week dream vacation—it’s about your dreams for the rest of your life.

So, what is an exit plan anyway? An exit plan is essentially a strategic plan for your business with a deadline and it consists of three core elements:

1.) Your ideal outcome: as the owner of the business, this is what you want to accomplish from exiting the business (financially and otherwise),
2.) A baseline assessment of where your business is today: how you compare to others in your industry, what the strengths and weaknesses of your business are from the perspective of the market, and what it is worth,
3.) A blueprint: a detailed plan that connects the dots to prepare yourself and your business for a successful exit transaction at a target date in the future

For more information about the three components of an exit plan, please visit our website www.market-view.com or Facebook at https://www.facebook.com/MarketViewJLCarterGroup/

Are you ready?
If you’d like to learn more about positioning your business for a successful exit transaction, please contact Jay Carter at Market-View. We’d love to have a totally free and confidential conversation to learn about your unique situation and show you how you can have your executable plan within 45 days.

Reach us at:

Market-View
Jay Carter
Founder and CEO
704-904-7543
[email protected]
www.market-view.com

What is an Exit Plan Anyway? By Jay Carter I am going to share a secret with you. If you are reading this article and are unsure what exactly an exit plan is...

06/02/2020

Now is Not the Time to Sell Your Business
By Jay Carter

This seems pretty simple and obvious, and it is---but it’s important that small business owners understand how the COVID-19 pandemic has impacted the value and the salability of your business. More importantly, what you should be doing now to preserve the value you have position it for a successful sale at a fair valuation and on fair terms in the future.

We just ended a multi-year run of strong merger and acquisition activity. It was a true seller’s market. There were plenty of private equity and strategic buyers competing to acquire private businesses, driving valuations up to some of the highest levels we have ever seen.

Things were going great until COVID-19 hit and the tables turned. Suddenly, a strong seller's market became NO market, and now a strong buyer’s market is emerging.

Those buyers who were around before COVID-19 are, for the most part, still around, they still have plenty of cash, and they are still looking to grow their businesses by making acquisitions.
The problem is that buyers take advantage of sellers when there is even the tiniest crack in their armor. They smell blood in the water and it becomes a feeding frenzy.

I have spent 25 years studying buyer behavior and using those findings to help business owners obtain maximum valuations for their businesses.

Even during normal times, if a businesses’ sales or profitability slip a month or two before closing, they are likely to hammer by the buyer on the price of the business or the cash they get at closing. It’s not because the business is less valuable to them—it’s just because they can. They are in the business of buying companies at the best price possible and either selling them at a higher price or using their profits to make their business more valuable.

So, what do you think buyers are doing now, in the midst of a global health and economic crisis? They’re doing exactly what you would expect them to do: they are hammering businesses on valuation based on lost sales and profits, and they are also hammering them on potential future sales and profits because of the uncertainty created by this crisis. This is not a just crack in the armor for sellers, it is a complete disrobing! Now is definitely not the time to sell your business!

But there is something you can and should be doing to that will enhance the value of your business. First of all, stop worrying about what your business is worth today. If you are not going to sell it now, it really doesn’t matter what your business is worth in theory on paper. Instead, start working immediately to position your business so you will receive maximum value and the most favorable terms when you do sell it in the future.

As business owners, we can’t control how long this recession lasts, but we can take high impact steps now that will level the playing field and enhance our appeal to buyers once the recovery comes. All we need to do is prime our business now so when the market improves, our businesses are at the front of the line, in the very best position to achieve higher valuations and more favorable terms.

The Don’t Sell/Get Ready Checklist
Over the years, we have identified over 100 unique Value Factors that can impact both the valuation of a business and its salability (or attractiveness) in the marketplace. When we evaluate a business, we evaluate each Value Factor and assign it to one of three categories: 1) Value Driver, 2) Value Detractor/Value Opportunity, 3) Value Neutral. A business with 70% or more Value Drivers is in the top 25% of all businesses and is generally considered attractive to buyers.

One of the most valuable things you can do for your business right now is to get a handle on how your business compares to others in your industry and specifically what buyers are seeking from acquisitions of businesses like yours. As part of this process, thoroughly assess your Value Factors, paying particular attention to the Value Detractors/Value Opportunities. Once identified, this is an excellent task list to begin the process of preparing your business for a future sale.

From our list of over 100 Value Factors, below are a dozen Value Factors that are high impact and apply to virtually all industries:

1. The company has a diversified customer base with no customer > 15% of total revenue.
2. The company has a diversified supplier/vendor base with no supplier/vendor > 15% of total purchases.
3. The company has a retention program to ensure key employees don't leave the company before a sale.
4. The owner could take a 4-week vacation without checking in, with confidence that everything will be fine when they return.
5. The owner has a good understanding of how much the business is worth today.
6. The company’s gross and net profit margins are above industry averages.
7. The company’s working capital is being effectively managed with a future sale in mind.
8. Inventory is fresh and relevant to the company’s current business.
9. The company produces timely, accurate monthly financial statements.
10. The owner reviews financial statements monthly, at a minimum.
11. The company’s products/services sufficiently differentiated from competitors'.
12. The company has a written business or strategic plan.

4 Takeaways
 Now is Not the Time to Sell Your Business
 Now is Not the Time to Put off Essential Planning
 Now is the Time to Take Steps to Prime Your Business and Enhance Future Value and Salability

If you’d like to learn more about positioning your business now for a successful future exit transaction, please contact Jay Carter at Market-View.
We’d love to have a totally free and confidential conversation to learn about your unique situation and show you how you can have your executable plan within 45 days.

Reach us here:
Jay Carter
Founder and CEO
Market-View
704-904-7543
[email protected]
www.market-view.com

Now is Not the Time to Sell Your Business By Jay Carter This seems pretty simple and obvious, and it is---but it’s important that small business owners under...

05/19/2020

The Secret to a Successful Exit Transaction

In my research of small business owners and keys to successful exit transactions, I discovered a Secret System that strongly favors buyers and penalizes sellers. This system works great for buyers because they built the system, and they use it to their advantage. Most sellers unwittingly operate outside of the system, severely limiting their opportunity for an ideal exit transaction.

The system that no one talks about and most small business owners are unaware of is similar to professional baseball. In the baseball economy, the is the Major League and the Minor League. Minor League teams serve as a farm system for Major League teams. If those players follow the program and work hard, will they have a shot at playing in the big league? This is an efficient system for both players and Major League teams.

Now, let’s consider the owners of a small business who planned to sell their business and retire. They have worked for over 26 years to build a very successful business. When it came time to sell the business, they were shocked to learn that their business would be difficult to sell, or, at best, it would sell at a significant discount to their expected price, jeopardizing their retirement plans. How could this be? The business grew every year, it was profitable, and had an excellent reputation in the marketplace. The owners believed they had built a business that any buyer would love to acquire.

This is not a hypothetical scenario. It happens every day, but it can be avoided. The problem is that this company was not part of “The System”. The owners didn’t even know there is a system. By operating outside of the system for 26 years, the owners set themselves up for failure and had no clue.

What’s The System? In many ways, this secret system that I recognized as similar to the farm team system for professional baseball. Buyers of small businesses (other than the individual buyers—the worst kind!) operate within parameters they have established for businesses they acquire. Before they even look at buying a business, they know that they’ll only be interested if the business fits within their box. To fit inside their box, a buyer may require that sales be least X, gross profit of is Y, and customer concentration less than Z%, and many more.

Buyers of small businesses know what they are looking for, just as the Major League baseball team knows exactly what type of players they need to complete or improve their team. The difference between these two scenarios lies on the other side of the transaction: Minor League baseball players know exactly how the Major League team will judge them, and they work to improve specific skills and personal stats to meet the standards of Major League teams.

The business owner is not part of a farm team and generally has no idea who would buy their business, how much they would pay for it, or what they consider attractive and unattractive attributes. They just work their butts off for 26 years and naively hope that it all works out. They are placing the outcome of the largest financial transaction of their lives into the hands of the buyer. This is the equivalent of the kid playing sandlot baseball and hoping to be discovered and drafted by a Major League team. This is a reckless strategy.

Are buyers the only ones operating inside the system? For the most part, yes. Business owners just don’t know what they don’t know. Serious buyers know exactly what they want when seeking acquisitions, but they fail to communicate this to sellers. This not by accident; it gives buyers the upper hand in negotiating acquisition and leaves the selling owners in a vulnerable situation.

We have the solution. Market-View was founded to bridge the knowledge gap between the most sophisticated and experienced buyers, and small business owners. We enable small business owners to plan and execute the sale of their business on a level playing field with buyers. Empowered with the data, analysis, and action plan included in a comprehensive Market-View Report, small business owners finally have insider access into the secret system. This provides them with the best possible opportunity to achieve their ideal exit transaction.

To learn more about why working from inside the system is the best way to position a small business for a successful exit transaction, please contact Jay Carter at Market-View. We’d love to have a conversation about your or your client’s unique situation and show you how in just 60 days we help defenseless outsiders become powerful insiders.

Reach us at:

Market-View
Jay Carter
Founder and CEO
704-904-7543
[email protected]
www.market-view.com

The Secret to a Successful Exit Transaction In my research of small business owners and keys to successful exit transactions, I discovered a Secret System th...

04/29/2020

Another Shot at the SBA EIDL $10,000 Free Money Lottery Giveaway?

Hi there. This is Jay Carter with another Market-View tip for small business owners.

If you haven’t already applied and received approval for a PPP Loan—before you proceed with my recommendation about the EIDL program
-- please go to my previous post entitled “Another Shot at the PPP Loan Program” and follow those recommendations first.
Due strictly to the relative sizes of these programs, your chances for approval under the PPP Loan Program are higher than with the EIDL program.

However, once your PPP application is in the hands of a solid lender, you should also check out the SBA’s EIDL Program (you can find information on this program at www.SBA.gov).
This is the one you may have heard of that is a grant program –this means “free money” of up to $10,000 per company.
The problem is that the SBA website is not currently taking applications for this program due to an overwhelming number of applications received by the SBA in the past 2 weeks.

We have been given no guidance if the application process will reopen, despite the fact that the Senate and Congress are expected to boost this program by $60 Billion later this week.

One hint maybe this post on the SBA Website:
Notice: Lapse in Appropriations
SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.

Okay, so maybe they’ll reopen applications once the new funding is approved, but I am not hopeful that this will happen. On the same page of the SBA website it says,

“Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.”

This may be the final nail in the coffin for EIDL application hopefuls who are not already in the queue.

My advice is this: check the SBA website frequently for updates on the status of the application process and if new applications ARE being accepted, go for it!
Apply right away, as it only takes about 3 minutes to complete and you may not have another chance.

These unprecedented times call for unprecedented actions by small business owners. During the current economic crisis, if you have questions about surviving the Coronavirus as a small business owner,
please contact a Market-View professional for a fee-free consultation.

Don’t forget that Market-View’s mission is to help small business owners preserve value, increase value, and prepare their businesses for a successful future sale or other exit transaction.

We’d love the opportunity to understand your unique situation and empower you with the information and market-based insights you need to make the very best decisions possible about the future or your business.

That’s Market-View’s small business tip for today. Good luck with your EIDL application and may God bless you and your small business.

Another Shot at the SBA EIDL $10,000 Free Money Lottery Giveaway? Hi there. This is Jay Carter with another Market-View tip for small business owners. If you...

04/28/2020

Clearing the Confusion Over Main Street New Loan Facility and the Main Street Expanded Loan Facility: Should You Apply?

Hi there. This is Jay Carter with another Market-View tip for small business owners.

The Main Street New Loan Facility (“MSNLF”) and the Main Street Expanded Loan Facility (“MSELF”) have been authorized under section 13(3) of the Federal Reserve Act and are intended to facilitate lending to small and medium-sized businesses by Eligible Lenders. The combined size of these two programs will be up to $600 billion.

Small business owners across the country are still hungover from the mass confusion created by the SBA and many lenders over the recently over-subscribed Paycheck Protection Program (“PPP”). Now, the Federal Reserve has approved the much larger MSNLF and MSELF programs and banks are bracing for a new wave of cash-starved businesses lined up for a chance at these funds. It is expected to be a couple more weeks before banks are able to accept applications for these loans, but if you’re thinking about getting one, now is the time to get yourself ready.

If you’re considering applying for either of these programs, here are some tips that should save you some time:

1) Read the Term Sheets on these two programs. They are 2 pages each and are pretty easy to follow. We have posted these at www.market-view.com.

2) Figure Out if You Are Eligible. Your bank will ultimately determine your eligibility but do a couple of quick calculations to see if you are in the ballpark.
a. Do you have 10,000 or fewer employees?
b. Was your revenue for 2019 under $2.5 billion?
c. Was your business created in the US?
d. Are most of your employees based in the US?
e. Was your company’s EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) for 2019 at least $250,000?
f. Will your total debt service (including the new loan) be less than 4 times your 2019 EBITDA?
3) Contact Your Banker. If you answered YES to ALL of these questions, you may qualify for one of these programs. If you do, contact your banker and get in their queue for applications.

4) Gather Up Your Stuff. Every bank will have slightly different documentation requirements, but to get a head- start, have at lease the following available to provide to your bank immediately:
a. Last 3 Full Years’ Income Statements and Balance Sheets
b. 3 Most Recently Filed Federal Tax Returns (business)
c. Year-to-Date Income Statement and Balance Sheet
d. Debt Schedule: list all existing loans including the lender, loan amount, payment amounts, availability (the unused portion of loans or lines of credit)

These unprecedented times call for unprecedented actions by small business owners. During the current economic crisis, if you have questions about surviving the Coronavirus as a small business owner, please contact a Market-View professional for a fee-free consultation.

Don’t forget that Market-View’s mission is to help small business owners preserve value, increase value, and prepare their businesses for a successful future sale or other exit transaction.

We’d love the opportunity to understand your unique situation and empower you with the information and market-based insights you need to make the very best decisions possible about the future or your business.

Well, that’s Market-View’s small business tip for today. Good luck if you decide to apply for a Main Street Loan and may God bless you and your small business.

Clearing the Confusion Over Main Street New Loan Facility and the Main Street Expanded Loan Facility: Should You Apply? Hi there. This is Jay Carter with ano...

04/22/2020

Effective April 9, 20201 Program:

The Main Street Expanded Loan Facility (“Facility”), which has been authorized under section 13(3) of the Federal Reserve Act, is intended to facilitate lending to small and medium-sized businesses by Eligible Lenders. Under the Facility and the Main Street New Loan Facility (“MSNLF”), a Federal Reserve Bank (“Reserve Bank”) will commit to lending to a single common special purpose vehicle (“SPV”) on a recourse basis.

The SPV will purchase 95% participation in the upsized tranche of Eligible Loans from Eligible Lenders. Eligible Lenders would retain 5% of the upsized tranche of each Eligible Loan. The Department of the Treasury, using funds appropriated to the Exchange Stabilization Fund under section 4027 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), will make a $75 billion equity investment in the single common SPV in connection with the Facility and the MSNLF. The combined size of the Facility and the MSNLF will be up to $600 billion.

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https://drive.google.com/file/d/15fGQEbGb80nikamVbtvNqDi1xa-_SLXV/view?usp=sharing