Money at Step 8:

Our lists are growing! Those business owners who
have sold their business is a growing list. Then there are those who have gone through the merger and acquisition (M&A) process. There are a few being bought out through an Employee Stock Ownership Program (ESOP). Some have done various kinds of public offerings, either a Direct Public Offering (DPO) or Initial Public Offering (IPO).

We also have a list of businesses that have disappeared. Though most were absorbed by acquisition and that old identity is gone, a few simply shut their doors and liquidated their tangible assets.

Our list of IPO case studies is limited but also growing. Usually IPOs dramatically change the corporate culture. If you do an IPO, you are saying, "We are growing beyond the size of a small business."

Though there many small steps to prepare to use your equity (most often just to become liquid), we summarize them in four basic tasks:

1. Business model. If you did that business plan back in the first four steps and it has been "in action" over the years, you will have demonstrated the sustainability of the business. It will also present the most leveragable aspects of your business through all your managers reports and contributions to that business plan.
2. Business Valuation: If you have been working through these steps, you have also been doing an on-going business valuation. It is based on the actuals from your quarterly financials (but now recast to maximize profitability, not to minimize tax burden), comparative data based on key critical ratios from within your industry, the leveragabilty of your business model, and your five-year projections from your business plan. Your goodwill (intangibles or blue sky) should quietly add to this valuation.
3. Equity-Liquidity evaluation model: Equity models include the ESOP, SCOR, M&A, Private Placements, Angel Capital, Venture Capital, and the IPO. The more you run scenarios with each option, the more you know the potential players.
   
   The more you know the potential players, the more valuable your equity becomes.
   
   
4. Exit Strategy. One of the scenarios for your exit from the business is to minimize your tax burden and to structure a deal that provides you with a balance of security -- you know the money is not at risk, but it does not all become available as reportable income in a single year.

There are many professional services available to help businesses with Mergers and Acquisitions (M&A) and to take a business public through the DPO/IPO process. Just put the words in quotes and you'll discover 1000s of useful links on Google. Here is the first of several episodes of the show where we are look at Step 8 and how one handles their money: Selling your Business. It's never easy."

The ESOP case study may also be useful. It is usually a long-term strategy that has been cultivated within a business over time.

If you are at this step, you probably know what to do better than we ever will. However, if you have not reviewed the information about DPOs, you would be well-served to do so.

There are no two business owners who are alike. No one formula works for every one and ultimately the decision rests on the abilities and leadership of you, the founder/owner and chief executive officer. Your board of advisors can help, but the decision is yours.

As we continue to add capabilities to this site (see the Future), these could become hot pages. Eventually we will schedule events so you can meet investors and drop off into individual chat sessions. We are just beginning this project. Help us out! What resources have you found to be useful? What resources and interests do you have? Send us a note.