Creating an Exit Strategy and Realizing Strategic Value (Sale of Business or Real Estate)

In selling a business planning and process are the keys to success. First there are the pre-sale considerations which include reflection about personal reasons for selling. There is also the impact on employees, vendors and customers and, particularly any family members in the business. Finally, you must ask if this is the appropriate time in the economic cycle to sell and determine if there are any threats to the business that would damage realizing maximum value.

The sale of a business begins well in advance of the actual event, often as much as one to three years before. Two of your first decisions will be deciding who will be the Team Leader, you or a professional. Then you have to select and engage advisors-law and accounting firms, and possibly an investment banker/financial advisor. Inside the company, key senior managers will need to be taken into your confidence about your plans including the chief financial officer and others. It may be necessary to incent them to remain with the business in the event of a change of control. Finally, it is important to "dress up" the business for sale and there are a number of factors that go into that process.

When you are prepared to go to market, the next important decision is whether your business would be most attractive to a financial or strategic buyer and whether announcing the business is "in play" will have an impact on negotiations. The process of developing interested buyers and negotiating the purchase and sale agreement combines both art and science so professionals who have experienced the process many times can anticipate the potholes of negotiations and enable you to remain in control. At the same time, your team leader should keep you out of the fray so that the negotiators have to come back to you on the really tough issues because they "need to check with the boss/CEO/Board" on all key questions such as terms and conditions and representations and warranties. This allows you to concentrate on running the business and to only think about the transition after the sale has been concluded but has not closed.

Transitioning Smoothly to the Next Generation of Leadership

Nothing is more important to any multi-generation family than how it addresses and manages the issue of transition to the next generation in the family and/or in the business the family controls. It is delicate, hard work and there is no rule book to guide one to success. However, here are some of the practical things that we do to help clients avoid the pitfalls.

Identify the opportunities and challenges of orderly succession

Provide guidance, coaching, and mentoring to outgoing and incoming managers on:

• Alignment of family and business
• Leadership
• Reformulating company direction, growth, goals and strategy
• Transition and continuity processes and tactics
• Stewardship of stakeholders
• Facilitate succession planning and execution

Develop family and business governance processes and mechanisms

• Board of directors
• Shareholder assembly
• Family Council

Assist in creating and implementing growth strategies for the future consistent with family and business reality.

Family, Business, or Financial Crisis

Occasionally, things do go wrong in business and experienced professionals may be needed. We have successfully helped some 40 companies address these issues. Problems in family and closely-held businesses may result from conflicting family and/or ownership objectives that hinder the implementation of a strategic plan or they may result from benign neglect.

Our responsibility is to assist you in addressing those issues that threaten the business. When lenders and creditors know that assistance from qualified professionals experienced in crisis management has been sought, frequently there will be opportunities for dialog that will result in a suspension of demands while a lender reviews the crisis plan. We are experienced in preparing and presenting such plans.

We can help you create and implement a strategic plan and manage the conflict resolution process among stakeholders. The strategic plan (including a succession plan) will stress realizing the family’s objectives and provide a system for management oversight. Quite often, an improved reporting mechanism is also necessary to measure progress and to provide reports to the family.

Because The Development Group is very process, consensus and results oriented we follow the same procedures in this area as we do with value creation and transition management. We will:

1. Help discover the problems, threats and opportunities.
2. Facilitate critical decision-making, often under very intense pressure, and create action plans.
3. Help implement critical action plans.
4. Help evaluate whether to restructure the business.
5. Negotiate financing and terms with creditors and lenders.
6. Monitor results with you throughout the process and after completion.

The Development Group has extensive experience dealing with troubled and under performing companies but we also provide strategic support services to emerging growth companies. Our focus in any of these situations is on maximizing asset values or cash flow consistent with shareholder objectives. TDG also manages complicated litigation matters for clients.

Examples of crises we have dealt with recently include:

1. Bank assigning a loan to its workout group.
2. Bank requiring a forced sale of assets.
3. Losing or expecting to lose significant capital from an investment.
4. Management is not responsive to shareholders.
5. Sudden death or incapacity of a family member or leader causes or threatens to cause disruption to the business.
6. There is no consensus or unanimity among the family or shareholders.

As with virtually all of our assignments, we establish an atmosphere of trust that encourages open communications and timely responses to opportunities and challenges; we act as facilitators and partners who “roll up our sleeves” and get to work solving the problem with you.