Value Driver Analysis
What We Know
Your Business Is Your Future…
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Most owners want to leave their businesses within next 5-10
years.
Most owners will never be able to leave their businesses in
style.
Most owners have no plan to grow value or to exit their
businesses.
Most owners work in, not on, their businesses.
The Market Value of Your Business
Current M & A Marketplace
• 20 percent of businesses are
for sale, but only one out of four
actually sells.
• Businesses with sales of $10
million per year aren’t much
better – only one-third sell.
• Above $10 million per year, the
odds improve to 50-50.
“Beauty is in the eye of the buyer.”
Every business owner
wants to receive the
maximum amount of
money in order to
accomplish personal,
financial, income and
estate planning goals.
This Value Driver Analysis will focus on:
• Identifying your Strategic Objectives
• Determining your current personal and business financial
resources
• The specific areas in your business that you need to
focus on to close the gap
What to Expect From the Value Driver Report:
– Personal Financial Needs Projection
– Estimate of Business Value
– Immediate Recommendations to Build Business Value
• Business Structure
• Corporate Strategy
• Process/Systems
• People
• Financial Management
• Performance Review
– Baseline for Ongoing GAP Measurement
Value Driver Analysis Result Example
Choosing your Exit Path - Selling to a Third Party
vs. Transferring to Insiders
As Yogi Berra said:
“You've got to be very careful if you don't know where you're
going, because you might not get there.”
Third Party Sales – Not Just About the Business
Ability to sell and business
value are determined by:
– Intrinsic Value: the value
drivers.
– Extrinsic Value: the value
the market places on the
business.
– Effectiveness of the sale
process.
“Making a mountain out
of a mole hill”
Promote Value Through Value Drivers
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Focus on increasing cash flow.
Develop operating systems that improve sustainability of cash flows.
Document sustainability of earnings.
Improve company performance as measured by industry metrics.
Pay down debt.
Restructure organization.
Solidify and diversify customer base.
Implement strategies to grow the company.
Develop and protect proprietary technology.
Build a solid management team and groom a successor.
Ownership Transfer to Insiders
Owners must understand the need to minimize income tax
consequences to the buyer and seller by minimizing
ownership value of the business.
“Making a molehill out of a
mountain.”
By completing our
Value Driver Analysis,
we can establish your
course, find ways to
build value, and create
a plan to exit your
business in style.
Create
Exit Plan
Build
Value Drivers
Create Course Correction
If you see ownership
change in your future, we
can help you plan towards
a successful business
exit.
Call or visit us online to request a
complimentary Value Driver Booklet.
Phone
858-200-0900
702-892-9911
Website
www.honeycuttsmith.com
Contact Us
Honeycutt, Smith & Associates
4225 Executive Square Suite 955
La Jolla, CA 92037-9122
Phone
San Diego: (858) 200-0900
Las Vegas: (702) 892-9911
Email
Website
info@honeycuttsmith.com www.honeycuttsmith.com
Paul E. Honeycutt, CFP® Practitioner, and Ronald F. Smith, CLU, ChFC are
Registered Representatives and Investment Adviser Representatives with/and
offering securities and advisory services through Commonwealth Financial Network,
member FINRA/SIPC, a Registered Investment Adviser, CA Insurance License No.
0728831, 0688599. Financial Planning offered through H.S. Financial, Inc. in the
States of CA and NV.