Goodnight Irene: Not The Exit She Had Expected

by Nick Niemann

Niemann, Nicholas
(402) 341-3070

With all of the debate recently about who is responsible for business owner success, Irene’s story comes to mind.

As a Certified Exit Planning Advisor (CEPA), one of the key observations I want our business owner clients to realize is that sophisticated business buyers consider 54 key factors in determining the value of a particular company.

Irene proved that business owners in fact are chiefly responsible for their success. As well as for their failure. She came in to discuss her desire to sell her company – now. But she, and it, were not even close to ready.

Irene had inherited a great import/export business which had been started by her grandfather over fifty years ago. In fact, she had turned this into a small fortune. However, as the old joke goes, the problem was she had started with a large fortune. What had at one time been a leading edge business was now wilting into irrelevance.

Research shows there are 12 principal reasons business owner transitions, successions and exits fail. Each of these reasons impacts the company’s longevity and ongoing annual profitability as well as an owner’s transition and future exit results. This article addresses the ninth of these 12 reasons:

Reason #9.  Not Always Ready For Sale.  You fail to realize your company should always be ready to be sold. This impacts your profitability today and your retirement/exit prospects tomorrow.

The entire world, from emerging to mature economies, is moving faster than ever. This is resulting in new products, services and experiences on a daily basis in both B2C as well as B2B industries.
As Trend Watching reports, “excitement and attention are being amplified and accelerated.” (July 2012 Trend Briefing:  “NEWISM. Why more than ever, consumers lust after the new. And why that spells heaven or hell for brands.”

Trend Watching identified half a dozen forces propelling NEWISM into even more prominence. One of these forces is that “everything is getting faster and FSTR.” It cites phenomena such as Instagram (10 million users in under a year) as well as Pebble (which raised over $10 million in 37 days on Kickstarter, a great enabler of the “new” innovation ecosystem where anyone can now test, fund and launch almost any new idea).
As I have been addressing with CEOs and their key executive teams around the country in my “Break It and Make It” business model workshop, Trend Watching also points out that the speed with which business models are being changed and created is also accelerating. For example, new business models (such as trends it refers to as LIFE: Subscribed, Tryvertising, Owner-Less and Recommence) are enabling consumers to experience the “new” with less commitment and at lower cost.

This doesn’t mean that all consumer focus is on the new.  No trend applies to everyone all the time. However, much is obviously changing and this is causing many brands (and/or their companies) to be expected to die soon (e.g. Avon, Suzuki, Pacific Sunwear, ResearchInMotion/BlackBerry, Talbots, American Airlines, etc.  See 24/7 Wall St.: “Ten Brands That Will Disappear In 2013”).

Irene had always expected this would never happen to her.  She had what we call the “Wishes Are Horses” Exit Plan. As the old saying goes, “If wishes were horses, then beggars would ride.” In fact, a successful retirement (or company sale) won’t occur just by wishing it to be so.

Irene didn’t see the deterioration occurring in her customer base, the lack of systems for addressing product and business model innovation, the changes needed to her customer channels, the failure to bring in new key partners. She wished it was otherwise. However, the likelihood of a successful sale anytime soon was remote. We took her back to the drawing board to show her how to rebuild.

Situations like Irene’s have prompted me to begin utilizing a new evaluation tool for companies, known as the Sellability Score©. This is a quantitative tool designed to analyze how sellable (and, therefore, how valuable) your company is.

By taking this 13 minute online survey, business owners receive an immediate Sellability Score. This was developed by a team of merger and acquisition professionals led by John Warrillow, the bestselling author of “Built To Sell: Creating A Business That Can Thrive Without You.”

Using specific statistical techniques from the merger and acquisition industry, the sellability of your company becomes predictable. The report we provide generates a roadmap for improving the eight key sellability factors. This is a starting point for enhancing the value of already strong companies and for getting companies like Irene’s back on track.

Have you built a company that is valuable? Yes – to the degree it is sellable. Find out now by clicking on the link below or going to

*This Newsletter contains no information that can be used to identify a specific client. This illustration was not the business in which our specific client was engaged.

Next Newsletter – Why Jeff’s delay meant he was now facing a double tax on the sale of his business.

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