Comment maximiser la valeur de votre entreprise? M. Stephen Reisler Commencez au moins 2 ans à l avance Associé, ROCG Americas LLC Montréal 1
Not For Re-Distribution ROCG s Proprietary Process 2
Building business value starts with Knowing and understanding 4 key things: 1. Your own Starting Point 2. Today s Playing Field 3. The Value Drivers of a business 4. The Benefits to Strategic Planning
4 Owners need to know current business value
1. Knowing Your Starting Point begins with realizing the end in mind. What s needed from the What s business it to satisfy your objectives and future lifestyle? really worth? $$$ $$$ $ Current Value (but we know that this often isn t only about the money) Desired Exit Value 5
2. Knowing Today s Playing Field Deal flow is down considerably over the last 4 years Significant increase in PE and strategic buyer interest (PE expects more than 50% of its deals this year will be with family/private companies in the lower mid market) Multipliers are down (Various reports 45% to 55% since 09) Scarcity of buyers (less buyers than sellers as per demographics) Time frame to complete deals has lengthened Seller financing has increased to get deal done/bridge the valuation gap through much more creativity in deal structures Delay in deals/sales/exits adds further supply to the pipeline, which lowers values of marginal companies in the future. All of this leads to setting up a Perfect Storm! 6
Private Equity (PE) group M&A Activity When? 2007 Avg. transaction size $373m 2012 Avg. transaction size $173m 42% fewer deals (62% less $ invested) 7
Business Value Cycles Should owners cut-and-run today or hang-in there? Prime Selling Time Almost Recession Deal Recession (Buyer s Market) (Seller s Market) (Neutral Market) 1980 1983 1988 1990 1990 1993 1998 2000 2000 2003 2008 2010 2010 Current Cycle 2015-2018 (Prime likely delayed by 2 yrs.) Next Cycle 2025-2028 Youngest Boomers Age 61-64 Next Cycle 2025-2028 Oldest Boomers Age 79-82 Robert Slee - Private Capital Markets
Private capital markets an overview Annual Revenues or Sales of US Businesses ($millions) $ 5m $150m $500m $1,000B Small Lower Middle Upper Large M I d d l e M a r k e t Companies 5.4MM 300,000 2,000 (Number of businesses) 15% 40% 45% (% of the economy) 2-3x 4-8x 8-10x 10-11x >12x EBITDA Multiples (normalized) Finding ways for 2 + 3 to = 7; Size does matter!
10 Building & managing business value
Perception of Business Value is everything! How a seller sees value How a buyer sees value 11
3. Understanding that the Value Drivers of a business start with minimizing its dependency on you as the owner Your business is more valuable if it can run without You! Eliminate all the dependencies Systematize the operations Develop the team Empower them to make decisions (even bad ones) Manage expectations Tactical thinking affords an owner a pay check, But. strategic thinking creates wealth 12
Your next phase requires YOU to Unless you have been living in a bubble, you know that you must consider making changes to your business. is not a four letter word to be feared! 13
14 Business owner(s) succession
4. Knowing why Strategic Planning is the key to Building Business Value Strategic ideas fall into one of four quadrants New Services Business Development 3 Stepping Out 4 Existing Services 1 2 Status Quo Business Extension Existing Clients New Clients
Growth Strategies Build Business Value Implementing strategic ideas also requires an analysis of your risk acceptance Higher risk New Services Business Development Launching New Services Stepping Out Major New Strategic Direction Maximum risk Existing Services Low risk Operational Improvement Focus Status Quo Existing Clients Attacking New Markets Business Extension New Clients Moderate risk 16
Intangible off balance sheet assets count! (Get any of these Rembrandts out of the closet!) Advertising campaigns Advertising materials Backlog Computer database Computer designs Contracts Copyrights Credit files Custom built factory Customer Demographics Delivery systems Distributorships Employee manuals Engineering drawings Experienced staff Favourable financing Franchises Government programs Growing industry Know-how Licenses Local economy Location Low employee turnover Loyal customer base Mailing list Management team Market share Name recognition Patents Proprietary designs Recession-resistant industry Reputation Royalty agreements Security clearances Skilled employees Supplier base Systems & procedures Technology Tooling Trademarks Trade secrets Training procedures 17
Business staging is.. This takes time, requires a plan, succesful implementation of action items, and time to practice!
What can t be neglected is.. This also will take time, requires you to plan and practice implementing, and should not be rushed
Comment bien vendre son entreprise à un tiers M. Yves Dufresne Consultant, ROCG Americas LLC Montréal Comment trouver un acquéreur pour votre entreprise? 20