EP 40: FAQ Friday: 2020-04-24

Ed Mysogland  0:01  
Please welcome please welcome welcome. This is another episode of the defenders of business value podcast podcast where we talk about what makes a business valuable. Learn the tips and tactics to increase your company's value that only veteran deal makers know. And now here's your host, Ed, miso clamp. Welcome to frequently asked question Friday, I'm your host Ed my sick land, I help business owners make sense of the value in their company so that one day they can sell it when they want, how they want and to whom they want. Each week, I answer three questions about business value, or selling companies that come in from the website or social media, this is a little bit shorter of an episode, but hopefully, it will be helpful in your journey to making a saleable company. Alright, so let's get to it. The first question today is how to tell employees about a pending sale? Well, the first thing you want to do is have somewhat of a plan. I mean, it, it obviously, if you if you've managed the sale yourself or with a broker, you know, I mean, it's it's a confidential thing, and it's never over until it's over. So the first thing you got to do is make a plan when, when and how are you going to plan it. And depending on the number of employees that you have, you may wish to phase out information. So the first thing is, like I said, make a plan, determine how and who is going to be included in that plan. And like I said, you're going to phase that in. So first thing I would do is, you know, if you have a management group, I would do it based on based on seniority. So you would first start with the top tier management group, help them understand that this, they do create the value in the company, it's not you may be transitioning out but the value of the company and what you've built tends to be with them. So I would first start with the upper tier management group, and then I will then move into employees. Now the problem with you need to consider with employees is that there is a lot of a lot of concern, you know, they they watch movies, and they're immediately thinking that they're going to be displaced, and that's just not the case. So consider them, consider, you know, who, if there's redundancies in the buyer, you know, if the buyer has, you know, they're going to be moving the facility are there's overlap, you know, there may be some displacement but, but again, I do believe that it's a matter of transparency rather than, than just dropping it in on him. So I would look at, look at the employee it reassure them that this is a good thing for them, it preserves their job not necessarily displaces them. The next thing they you probably need to address is that culture may change. You know, culture is a real big thing these days and you don't know what the by the next buyer will bring in the in the way of culture, you can do all kinds of due diligence and get the gut feels and all kinds of things to assess the buyer and what they're going to do. But at the end of the day, you you really have no idea what what your business will look like 12 months from now, but at the end of the day, you do want to address that your culture may change and it may change for for the goods. So it's worth giving that new buyer a shot. And then lastly, I think when when you do it is is kind of up to you, I think at the end of the day preferably on say a Friday where you know, it's more of a celebratory type scenario as opposed to you know, one day you're here one day you're not. I think you need to make it a real good thing where you introduce the buyer. Here's why I selected the buyer to sell to here's kind of the vision and then they have the opportunity to also do their own introductions

so this one can't get away from Coronavirus. So what is the business landscape look like? With a new business model and business valuation. Alright, if I understand the question is okay, so So the business does not look like it used to, you know, I'm not certain that that's necessarily a bad thing. I'll just take our practice for example. I mean, we you know, the last 30 days I mean, we have made room Unbelievable strides and changing how we're doing business. I mean, we're belly to belly business. But at the same time, we're changing too, to accommodate the social distancing. So now let's move it forward a little bit. Now we have the opportunity to minimize business owners time, we can do zoom meetings and kind of have an introductory conversation. And that's a good thing. Well, you know, as we look at the innovation that's happened. And even though, like, for example, restaurants have taken a tremendous hit, I talked to one restaurant tour that this is a great thing. He's never going to have a storefront, again, 90% of is his business, and he hasn't missed too much of a beat, but 90% of his business is now totally online and delivery. So he is he is stoked, he doesn't need to pay roughly, in his case, 8% of revenue to a landlord he can he can operate in, in an industrial complex where where rents are roughly, you know, 232 dollars a square foot. And so any rate, I think it just depends, I think, once we see and the dust settles and who is who is left standing and what their models look like, then we'll be able to to determine what the effect of business value is, but it's still ultimately rests on the following. It rests on earnings, it rests on growth, right and expectation and then risk. So this Coronavirus has done nothing but amplify risk, where are the chinks in the armor in the process. So the new normal and I hate that using that, that cliche word. But you know what is new may be better. So I think we just need to kind of sit tight and see see where this thing lands. But I'm relatively encouraged on what what business value looks like here in 2122. So I hope that answers your question. If you need a follow up, just reach back out. The last question is about equipment appraising. So what do you believe the the market is for used equipment after Coronavirus? Okay, so I do a fair amount or not as much as I used to, but I do a fair amount of equipment appraisal for allocation of purchase price for the deals that we do. And my take is, like the last recession, I mean, there's there was a businesses were going out of business. And as a result, more equipment was being put on the market. So obviously was supply and demand, the values would decrease just simply because there was alternatives to find cheaper, cheaper equipment elsewhere. And with certainly with the internet and online auctions. You know, it's it's a lot easier to get better deals. So my take will be that it will, the values of equipment will go down as supply goes up. And regretfully, I hope that I'm wrong, but I actually don't think I'm going to be on this one. So that I hope that answers that if you need resources on where you might want to sell equipment or how to get equipment valued, certainly reach back out to me and I'm happy to help in that capacity. Well, that about wraps it up. But before you go, would you like to receive a weekly newsletter of curated articles that I've stumbled upon, or I'm writing about regarding business value and making a company saleable? Well, if so, go to defenders business value.com and sign up for the newsletter. Now if you have a question that you would like answered, go to, again, the website defenders of business value.com and push the appropriate button. Or you can email me at ed at defenders of business value.com Or you can reach me at Twitter at Ed miso. Thank you so much for spending time with me. If I can ever be of help to you in any way please don't hesitate to reach out. Have a good weekend, and I'll see you next week. This was another episode of the defenders of business value podcast for more episodes packed with strategies to increase the value of your business visit defenders and business value.com For shownotes transcripts and free tools to start you on your journey. Subscribe now so you don't miss any future episodes.