Fuel Oil News

Fuel Oil News June 2013

The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding

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Spring LITERATURE SHOWCASE 2013 Selling Your Company Five things you need to do now to prepare your company for sale B y E r i c K e r n , v i ce p r es i d e n t at A lle g i a n ce C a p i tal C o r p o r at i o n T make in selling their company is not preparing soon enough. Whether you want to sell your company in a year, five years, even ten years and beyond, there are five steps you need to take right now that will maximize your company's value. These issues are critical. Proper preparation will: enhance the value of your company, make the transaction flow more smoothly, and avoid pitfalls that often terminate transactions midstream. Clean Up the Financial Statements "Clean" financial statements doesn't just mean that all the numbers add up and you know you can make payroll. Buyers expect: detailed forecasts, budgets based on those forecasts, and a "Quality of Earnings" report that validates your EBITDA calculations. This includes cleaning up the balance sheet and operating slack, and eliminating personal expenses that have been paid for by the company. There are even firms that provide temporary CFOs to manage this process and to prepare companies for sale. Investment banks often take advantage of those services to get a seller's finances up to date and ready for detailed inspection by prospective buyers. Having great financials keeps the sales process moving smoothly; the reverse causes all kinds of delays, leading to deal fatigue on both sides and less likelihood of a successful transaction closing. One of the biggest financial issues we often see is buyers who look at financial statements differently. They want to see how each individual product or service that you provide contributes to the overall success of the company. Often, owners just aren't collecting detailed financial data and keeping records broken down to that level. For example, if you operate a company that provides fuel oil and other services, a potential buyer may want to see two separate sets of financials for each operation to determine, which is operating most efficiently and contributes the most to the bottom line. Take a look at your financials through a buyer's eyes and make sure that you collect and analyze data the way an acquirer will in their due diligence. 2 Create a Great Management Team he number one mistake business owners Some sellers think that because the buyer is taking over ownership, they're also taking over management, so the company's current management team is irrelevant. That couldn't be farther from the truth. Financial buyers, like Venture Capital (VC) funds and Private Equity Groups, want to invest in companies, Eric Kern is a vice presinot run them. These investors realize the dent at Allegiance Capital seller has created a successful operation Corporation with approximately 15 years experience and they need your team to maximize the in investment banking, return on their investment. commercial banking and consulting. During that time The investors may bring in some seahe has facilitated, advised, or closed on over $600 mil- soned experts to add value to your board lion in transactions involving of directors, or provide a professional privately-held and closelysales executive if you don't have one, but held businesses. His busithey're not going to jump in and immeness perspective has been shaped by experience with diately take over. Strategic acquirers or literally hundreds of busicorporations who purchase smaller comness owners and managers representing companies panies operate the same way. They need ranging from start-ups and small businesses to Fortune your current management team to help 500 companies. transition your company and integrate it Ph: 214-217-7757 or e-mail with theirs. ekern@allcapcorp.com If top management does want to walk away immediately, or in the near future, competent successors should already be chosen, groomed and in place, ready to take over to minimize disruption. Ideally, your company would have a well-developed executive team of competent professionals who are capable of working together as a team. Have a Clear Strategic Focus Your company should have strategic goals that are clearly communicated. Employees should know your goal is to become the number one fuel oil provider in your region, and how you plan to achieve that goal. This is what Jim Collins, author of Good to Great and Built to Last, calls a BHAG: a Big Hairy Audacious Goal. His research found that companies with a very clear focus on the value-add they bring to their industry far outperform their Spring LITERATURE SHOWCASE 2013 | FUEL OIL NEWS | www.fueloilnews.com

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