Sell your business your way getting out getting rich and getting on with your life

Sell Your Business Your Way 15951$ $$FM 05-23-06 16:02:17 PS PAGE i This page intentionally left blank 15951$ $$FM 05-23-06 16:02:17 PS PAGE ii SELL YOUR BUSINESS YOUR WAY GETTING OUT, GETTING RICH, AND GETTING ON WITH YOUR LIFE Rick Rickertsen with Robert Gunther AMERICAN MANAGEMENT ASSOCIATION NEW YORK • ATLANTA • BRUSSELS • CHICAGO • MEXICO CITY • SAN FRANCISCO SHANGHAI • TOKYO • TORONTO • WASHINGTON, D.C 15951$ $$FM 05-23-06 16:02:18 PS PAGE iii Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 Tel.: 212-903-8316 Fax: 212-903-8083 Web Site: www.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought Library of Congress Cataloging-in-Publication Data Rickertsen, Rick Sell your business your way : getting out, getting rich, and getting on with your life / Rick Rickertsen with Robert Gunther p cm Includes bibliographical references and index ISBN-13: 978-0-8144-0896-4 ISBN-10: 0-8144-0896-6 Sale of business enterprises I Gunther, Robert E., 1960– II Title HD1393.25.R53 2006 658.1Ј64—dc22 2006008839 ᭧ 2006 Rick Rickertsen All rights reserved Printed in the United States of America This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 Printing number 10 15951$ $$FM 05-23-06 16:02:18 PS PAGE iv As always, for Iris and Ocke 15951$ $$FM 05-23-06 16:02:18 PS PAGE v This page intentionally left blank 15951$ $$FM 05-23-06 16:02:18 PS PAGE vi C O N T E N T S Foreword by Michael Lewis ix Preface xi Acknowledgments xv A Moment of Truth Looking in the Mirror What Do You Want? Be Clear About Your Goals 14 First, Get Your House in Order Prepare for the Sale Years in Advance 43 Take Care of Your Other Children Family Is Family, Business Is Business 70 Build Your Dream Team (But Remember, It’s Your Dream) Competence and Chemistry—and a Freebie from an Investment Banker! 94 Valuation How Much Is Your Business Worth? 109 Bring in the Right Buyer Market the Company to Achieve Your Goals 126 Nail Down the Deal Drive to a Sale Without Taking Your Eyes off Your Day Job 141 vii 15951$ CNTS 05-23-06 16:02:20 PS PAGE vii viii CONTENTS Make the Most of Your Money Investing Wisely and Avoiding the Tax Man 161 10 And Now, for Your Next Act You’re a Millionaire, Now What? 182 Appendix A: Get It in Writing Documents for the Deal 195 Appendix B: Resources 245 Index 297 15951$ CNTS 05-23-06 16:02:20 PS PAGE viii F O R E W O R D of the 1980s, a number of corporations—the car rental company Avis comes to mind—made several trips between the public and private sector It was as if Wall Street had gotten into the business of selling round-trip tickets to the stock market Each time a company changed hands, the corporate managers and their investment bankers invoked some higher principle When Avis went private, it was to harness the greater efficiency and enthusiasm of managers who were also owners; when Avis went public again, it was because the company could not grow as it deserved to without greater access to capital On and on it went, in a kind of endless spin cycle The main consequence of a lot of this activity was to enrich investment bankers who were, in effect, churning entire companies In some cases, the investment bankers were simply colluding with corporate managers; but in many cases, they were preying on the insecurities and ignorance of those managers In either case, a lot of people at the mercy of Wall Street would have been better off if the two processes at the heart of high finance—taking a company public and taking a company private—had been de-mystified Now they have been—and by a former investment banker, Rick Rickertsen A few years ago, Rick wrote an interesting book called Buyout, which advised corporate managers how to take their public companies private without undergoing a body cavity search by Wall Street That book was a paean to the owner-manager Only when he became an owner could the manager reap the fruits of his labor, DURING THE LEVERAGED BUYOUT CRAZE ix 15951$ FRWD 05-23-06 16:02:23 PS PAGE ix ... Rickertsen, Rick Sell your business your way : getting out, getting rich, and getting on with your life / Rick Rickertsen with Robert Gunther p cm Includes bibliographical references and index ISBN-13:.. .Sell Your Business Your Way 15951$ $$FM 05-23-06 16:02:17 PS PAGE i This page intentionally left blank 15951$ $$FM 05-23-06 16:02:17 PS PAGE ii SELL YOUR BUSINESS YOUR WAY GETTING OUT, ... deal business I have worked on hundreds of transactions and closed more than fifty I’ve been a buyer and a seller, and I’ve worked with buyers and sellers I’ve done some tremendous deals and led