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Last Update: Sunday April 11, 2021

Small Business Stock Market & Exchange

Exit with your equity, but leave the heart


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The world:  Most of us small business owners do OK competing with the big businesses in our industries or we don't survive. But when it comes to our exit strategy and succession planning, most of us fall on our face.

This episode is to explores business valuation and exit strategies.

Nobody wants to see you liquidate. That's getting pennies on your dollars. Tangible assets get sold (fire sales) and the intangibles are lost forever. Liquidation is the worst kind of liquidity.   An exit strategy is just like doing a will, but here you try to maximize the dollars you get out of our life's work.  

Most of us will sell our business through merger or acquisition. But, if we get much over two-to-three times sales or six times earnings, we all think we've done very well. Yet, when big business sells, they usually begin at six times earnings. Then we see 40 times and even 300 times earnings on the open markets. Why should we be satisfied with so little?  

Most of us don't think about our incorporation stock certificates... if these could be sold to anyone. Yet, once you do your first business valuation and study your key ratios, you begin to focus on creating a transferable asset. Even our 17+ million sole proprietors – we all should grow in a way that the knowledge base and the intangible assets can be transferred. 

View all the clips of this episode...
   On selling to a someone like you...

It will all begin with an Index for Growing Companies.  Several episodes of the show look at ways businesses take equity out of their business and establish an exit strategy so there business is sustainable beyond their involvement.  There is an entire episode that looks at the eight possible exit strategies and the eighth looks at this option in detail.

As these local indexes grow, each local business association and local Chamber of Commerce will be further helping to shape the future of the community.

Basic assumptions  There are many legacy businesses and blue chip companies that are some of the solid citizens of every community. This option is not a benefit to them. There are many small businesses that are doing less than $1M in revenues. A local index makes it easier and more  attractive for investors to find those businesses that are open to taking on equity partners,  

The owners get liquidity as they activate an exit strategy.

A listing of the 400,000 of the best small business

Such a listing will fascinate the world. Pension and mutual fund managers seeking more diversification, are looking closely at efforts by American Express Financial Services, Nasdaq, Morningstar, Thomson Financial and the Private Equity Investors (PEI) to open a small business equity-liquidity model that is not contested by the SEC.

There is a desire to participate in the best small business on Main Street and to date, there is no equity access to these businesses and liquidity thereafter. That is changing.

Online reporting:   Increasingly tools exist for small business owners to participate in such an index.  Some tools automatically upload  key financial ratios at the end of every closing so business owners can do an analysis of their business by the averages within their industry. That same mechanism creates transparency if a business were to decide to take on equity capital for either succession or an expansion. The SEC has been encouraing such a development since they began their annual Small Business Capital Formation conferences back in 1982.  Further,  such a model is a challenge for more transparency within NASDAQ and NYSE.

Indexes of learning companies and growing companies give those businesses the audience and the opening to equity partners that they need to have their business successfully transition beyond themselves.

We always invite your COMMENTS OR QUESTIONS. Would you like to be listed?

For more, study these clips and their episodes:

Sell to Your Employees

2:14 | Play Now

Use an Employee Stock Ownership Plan as the instrument to sell your company to your employees.

Sell Through a Direct Public Offering

2:37 | Play Now

While the Initial Public Offering (IPO)  is relatively well examined, the Direct Public Offering is not. Little known among DPOs is the Small Corporate Offering Registration, known as a SCOR. Stockbroker David Porter explained the benefits.

Sell Into the Private Equity Market

2:58 | Play Now

Steve Watkins tells us how businesses are selling their securities, the stock certificates we got when we incorporated, within the Private Equity Capital Market.