Thursday, 24 of April of 2014

Who is a Part of Your Exit Planning Conversations?

Business owners who are thinking about an exit plan struggle on many levels with advancing forward.  At its core, exit planning is about making a significant change in ones business and life.  Therefore, the very personal aspect of this planning cannot be ignored.  However, there is also a ‘company’ perspective to exit planning.  This involves how your business will run without you one day.  Do you have the people in place for the business to run without you?  Are you engaging those people in a conversation about the future of the company, with or without you?  Or are you, like many owners, thinking that you’ll construct your exit plan without the input of the people closest to you?  This newsletter is written to help you have a better and stronger exit planning conversation with the people that you need supporting you with making this large financial and emotional change.


The Personal Nature of this Planning

Every exit planning conversation will have confidential topics that the owner wants to share, at least initially, with only a few people.  You can have these conversations with your most trusted advisor(s) and a select group of others, perhaps including your spouse.  Your wealth, how much there is, where it will end up, who you want it to impact, and your own feelings of importance surrounding your role in your business are all very personal and not likely topics of conversation to have with managers and ‘outside’ advisors.  Therefore, a select group of personal advisors can assist you in getting clarity on these issues.

However, it is recommended that you seek out an individual who can transcend the personal issues that you are discussing to also assist you with the business issues as well.  This ‘quarterback’ is a trusted advisor who can take your personal objectives and translate them into actionable items for your business.  After all, your company will transition to new ownership in the future.  If you fare well in this process, your personal goals will be met with your business objectives.  Having an advisor who can see both sides of the equation is important.  So the next question becomes who at your company can you confide in to assist with your planning?

Your Management Team and the Future Leadership / Succession of Your Business

Have you brought up the topic of your exit at the last meeting that you had with key employees and managers?  Probably not.  The likely reason not to bring up this topic is that most owners fear that their managers will assume that the owner is simply selling the business and the managers may begin to question their future role and career at the company under new ownership.  As an owner contemplates the potential for this type of reaction, it becomes clear that a strategy is needed to have this conversation with the management team.


© Copyright 2013 Pinnacle Equity Solutions, Inc

Frank Mancieri, 401-651-1585,

It’s Now Next Year



Citing economic uncertainty, many companies deferred critical business decisions in 2013.

Meanwhile an economic transformation was underway.  As reported by The Institute of Supply Management, the year through November saw production, new orders, order backlogs, and the Purchasing Managers’ Index record six consecutive months of improvement — and the positive trend is accelerating.

The Wall Street Journal reports an energized expansion of GDP, elevated consumer spending, and that “homebuilders are stepping up construction; manufacturers have ramped up production; and hiring continues at a steady pace.”

The Journal’s analyses also establish that “After-tax Corporate profits in the third quarter topped 11% of GDP for the first time since the records started in 1947.”

In December, after stimulating the US economy for over 3 years, the Federal Reserve Bank announced that with the strengthening US economy, the stimulation is now being scaled back.

Finally, economists at PNC Bank observe that annualized US economic growth in 2014 will be “around 2.5%, up from 1.6%” in 2013″ — a 56% improvement.

Waiting until next year was a common reason for deferring business decisions last year.

It’s now next year!


Article provided by:


Standish Executive Search LLCBoston, Massachusetts

Providence, Rhode Island


Stanley H. DavisFounding Principal

Planning an Exit Requires a Relationship, Not a Transaction Mindset

For business owners who are thinking about exiting their business in the near (or not so near) future, there are many things to consider to assure the business transition happens in a smooth manner.  Owners are wise to seek the counsel of advisors in this complex and delicate area.  While discussing an exit with a professional advisor, owners are well served in asking how the advisor that they are speaking with perceives their role, as well as, how that advisor is compensated.  This newsletter makes the argument that in order for this process to go smoothly, owners should seek out the counsel of ‘relationship-based’ advisors in favor of ‘transaction-based’ advisors to create and begin implementing a multi-year exit planning process.

consulting  Understanding an Advisor’s Role in an Owner’s Life

 Advisors enter a business owner’s world mostly on a reactive basis, usually because there is a need for assistance with an outstanding issue.  For most owners the relationship with their accountant is the most consistent and often the most trusting in the realm of financial issues and that is simply because state and federal governments require, at a minimum, that businesses – and their owners – file their taxes each year.  This is, again, a reactive (albeit very important) approach to the process of finding an advisor.

However, some business owners buck this trend and actually take a proactive approach to working with their advisors, including a commitment to planning for the future.  These owners recognize the importance of ‘staying one step ahead’ and they seek out the best advisors for their short-term and long-term needs.

The Relationship-Based Advisor versus the Transaction-Based Advisor

So, given that most owners work with professional advisors, it is helpful to categorize them.  The world of professional advisors can be neatly divided into two (2) types; relationship-based advisors and transaction-based advisors.

Relationship-based advisors are those who come into the business owner’s lives and work with them, year-in and year-out, on a consistent basis.  Two of the leading relationship-based advisors are accountants (for reasons stated already) and attorneys (often at the beginning of a business venture and again when the need arises).  Many owners also confide and place their trust in financial planning professionals, insurance and risk management advisors as well as general business coaches and consultants.  These advisors take the approach that a relationship with a business owner exists over a long period of time and they remain available to these owners as needs arise.

Transaction-based advisors are those who approach the relationship with the owner with an eye towards addressing a specific, non-recurring issue for that owner.  These advisors might include real estate brokers, consultants who start and complete certain projects for owners, valuation professionals as well as mergers and acquisitions advisors.  These advisors enter the lives of owners to execute a certain transaction.  For the most part, these advisors also plan to leave the owner’s life shortly after the transaction / project ends.

Exit Planning is a [multi-year] Process, Not a Transaction

The process of exiting a business is not a transaction, but rather it is a process.  The process includes an owner thinking through all of the implications of the business running without their individual efforts as well as how the owner would live without the business.  Owners who go through this process ask themselves, ‘who will run the business other than me?’ and ‘what would fill my life in the absence of working in the business?’


Pinnacle Equity Solutions © 2013

Frank Mancieri, CFO and Exit Strategy Services, 401-651-1585,

Jerry L. Mills (CEO of B2B CFO) Named Among Top 5 Finalists of the Middle Market Thought Leader Award

GlobeNewswire: Jerry L. Mills has been named among top 5 finalists of the Middle Market Thought Leader Award.,

B2B CFO News

Do you have a billion dollar business hiding inside your company?

Asking customers to pay to join a special group of your best patrons can increase your revenue, encourage customers to buy new products and services from you, and provide a healthy boost to your cash flow. Just ask Jeff Bezos, the founder of and the chief architect behind Amazon Prime. In exchange for $79 a year, Amazon Prime customers get:

  • Free two-day shipping on millions of items
  • Unlimited streaming videos and TV shows
  • 350,000 books to borrow for free.

business dollarsIt’s a compelling offer, which is why, according to TIME Magazine, more than 10 million people have signed up. If you do the math, that makes Prime close to a billion-dollar business for Amazon. And like most programs, members pay upfront, giving Amazon a big injection of positive cash flow.

But what is even more interesting is what being a member of Prime does to the buying behavior of the average Amazon customer. Prime customers pay their $79 upfront and therefore are eager to ‘get their money back’ by purchasing a bigger and broader array of products from Amazon. With free shipping and a $79 nut to recover, Prime customers go well beyond buying books from Amazon and now get everything from tires to turtlenecks from the e-tailer. According to TIME, the average Prime customer now spends $1,224 per year with Amazon vs. the average non-Prime customer who spends just $505. In other words, Prime customers spend almost three times more per year than non-members.

Most businesses have some sort of loyalty program (buy nine sandwiches and the tenth is on us or get five hairs cuts and the sixth is free). The difference with Amazon Prime is they are charging customers to sign up for their special club and the fact that customers pay to join changes their buying behavior to want to recover their membership fee.

Amazon did not invent the pay-to-join-our-club business model. Private members clubs have been doing it for years. To join an elite golf club, you pay an initiation fee of tens of thousands of dollars, which then acts as a barrier to ever leaving. But as with Amazon Prime customers, becoming a member also changes a member’s buying behavior regarding other items. When compared to someone shooting 18 holes at a public course, the average golf club member is much more likely to buy balls from the shop, lessons from the pro, and dinner from the dining room.

The “AMC Stubs” loyalty program charges moviegoers to join the club. In return, customers get free upgrades on the size of popcorn and drink orders, along with $10 of Stubs rewards to spend on anything in the theatre in return for every $100 spent. AMC’s best customers become even better customers by going to the movies even more often and filling up with goodies while they’re there.

Look at the spending patterns of people who pay a premium to join a credit card company’s loyalty program. Customers who pay upfront for a premium card charge a much broader and deeper set of services to their card than people using a freebie card.

Getting your customers to pay to join your elite customer club requires that you design a compelling offer as Amazon Prime and AMC Stubs have done. But if you build it right, not only will the club itself turn a profit; it will also provide a quick boost to your cash flow and create a legion of sticky customers who buy more because they paid to become a member.

Frank Mancieri, CFO and Business Exit Planning Services, 401-651-1585,

How Much of the Future is in Your (Exit) Planning

planningSmall businesses – those with a few million in revenue to approximately $50 million in revenue – are often run by their founders.  And because these founders were generally experts in their fields before they were tasked with running an enterprise they tend to incorporate less planning in their businesses.  Rather, these owners often set the strategic directions of their businesses in an ad hoc manner, incorporating various techniques to drive their businesses while mostly setting the direction of the business with their instincts.  The purpose of this newsletter is to emphasize the importance of seeing into the future with your planning – particularly with your exit planning.

The Planning Process, Generally Speaking

Generally speaking, the process of planning for a business’ future is all about setting the direction for the enterprise with the best knowledge and inputs available today.  The planning process is not only about forecasting the future, it is also about gaining focus and consensus amongst the team that assists the owner.  Done properly and consistently, the planning process for a business provides direction, communication, alignment of resources, and a plan for executing on the initiatives set forth in the plan.

The Six and Twelve Month Plans

While the planning process is about looking into the future, it is a matter of how far into the future any owner can see that is the greatest challenge.  While the visibility of a business’ future is often difficult to see beyond the immediate 24 to 36 months, it is important to look beyond these more obvious planning dates when planning an exit.  For example, an owner may be accustomed to hold planning meetings for the next three (3) to six (6) months for their business.  At a tactical level, this three (3) to six (6) month plan provides immediate direction to the managers and allows the momentum to carry forward with the businesses’ current initiatives.

From time to time the planning process will complete a vision for the entire next year (i.e. 12 months).  For companies and owners who conduct annual business planning sessions, they usually occur in the fall or winter seasons, prior to the expiration of the existing calendar year.  The planning process is usually started with a projection or a goal for desired revenues for the next year.  This target goal is often agreed to by the management team and, once set, the ‘process goals’ are discussed and agreed upon to focus the team.

Pinnacle Equity Solutions © 2013

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How Does My Readiness for an Exit Impact My Options?

The path that an owner follows in leading their organization through a successful transition to another owner is a personal process.  Owners will not exit / stop working in their businesses until they are truly ready to do so and when an owner understands what they are trying to achieve as well as their readiness to achieve it, they are making great progress towards a successful exit. This newsletter is written to assist owners with interpreting their goals and readiness for an exit and then understanding which exit options may be most appropriate for their situation.


An Owner’s Readiness for an Exit Drives the Best Options

All business exit planning begins and ends with what an owner wants most combined with how well prepared they are to execute.  For example, an owner may want his key person to take over the business in the future.  Well if there is a risk that the business will not survive in the hands of the key employee, then that owner will certainly want to first know how dependent they are on the business’ future success and income, i.e. that owners’ financial readiness for an exit.  In this case, if the owner has sufficient assets and streams of income outside of the business, he or she may not need to worry about the future success of the business (at least from a personal, financial perspective).  More often, however, owners are not ‘ready’ for this transition because they are, in fact, dependent upon the future success of the business to fund their lifestyle.

By contrast, an owner who is ready to leave the business today may decide that they do not want to take the time to transition to managers over a series of years.  This ‘high mental readiness’, i.e. the desire to move on from the business right away, may lead that owner down the path of selling to an outside party and / or an investment group (such as a private equity group).  In this case, the owner’s ‘mental readiness’ will drive them towards a sale transaction as the best option to meet their current needs and desires.


© Copyright 2013 Pinnacle Equity Solutions, Inc

Frank Mancieri, CFO and exit strategy services, 401-651-1585,

The Many Roles of an Exiting Owner, Including How You Can Take Your ‘Exit Compensation’

responsibilities   Business owners do many jobs at their companies.  From chief cook to bottle washer, the privately-held business owner understands that the buck stops with them.  Now, despite the number of jobs that you perform at your company, those responsibilities technically fall under your role as an ‘employee’ of the business.  Beyond being an employee, most owners also own and control a substantial part (if not all) of the equity in their businesses.  And, technically, these business owners also serve as Chairman of the Board of Directors for their companies.  It is these various roles that we want to review in this newsletter to assist you with considering what role you are playing when you are looking to exit your business.

Private versus Public ‘Roles’

In a publicly-traded company the managers, board members and shareholders are all [mostly] different people.  In the ordinary course of event, it is the shareholders who own the business.  These shareholders vote for a ‘slate’ of directors that are hired on behalf of the shareholders to run and oversee the business.  It is this board of directors who hire and oversee the managers for the enterprise.  Finally, the managers conduct their activities in a fiduciary capacity to ‘increase shareholder value’, reporting to the board and sharing profits, when they occur with the shareholders.  A good job by the managers means higher earnings and a growing value for the company.  Stock prices rise, shareholders make money, directors get re-elected and the managers get to keep their job. The value that the managers create ultimately belongs to the shareholders.

Technically, corporate governance of privately-held businesses is no different than those of publicly-traded companies.  Privately-held business owners, however, hold all of the three (3) roles mentioned above.  They are the shareholders, board of directors as well as the managers of the business.


© Copyright 2013 Pinnacle Equity Solutions, Inc.

Frank Mancieri, CFO and business exit strategy services, 401-651-1585,

Justification for Your Next Vacation

A recent survey by The Sellability Score found companies that would perform well without their owner for a period of three months are 50 percent more likely to get an offer to be acquired when compared to more owner-dependent businesses.


There is no better justification for taking a blissful, uninterrupted holiday than to see how your company performs in your absence. The better your company runs on autopilot, the more valuable it will be when you’re ready to sell.

To gauge your company’s ability to handle your absence, start by taking a vacation. Leave your computer at home and switch off your mobile. Upon your return, you’ll probably discover that your employees got resourceful and found answers to a lot of the questions they would have asked you if you had been just down the hall. That’s a good thing and a sign you should start planning an even longer vacation.

You’ll also likely come back to an inbox full of issues that need your personal attention. Instead of busily finding answers to each problem in a frenzied attempt to clean up your inbox, slow down and look at each issue through the lens of a possible problem with your people, systems or authorizations.


Start with your people and answer the following questions:

  • Why did this problem end up on my desk?
  • Who else is qualified to answer this question and why was that person not consulted?
  • If nobody else is qualified, who can be trained to answer this question in the future?


Next, look at your systems and procedures. Could the issue have been dealt with if you had a system or a set of rules in place? The best systems are hardwired and do not require human interpretation; but if you’re not able to lock down a technical fix, then at least give employees a set of rules to follow in the future.


You may be a bottleneck in your own company if you’re trying to control spending too much. Employees may know what to do but do not have any means of paying for the fix they know you would want.

For example, you could put a customer service rule in place that gives your front line staff the authority to make a customer happy in any way they see fit provided it could be done for under $100.

You might allow an employee to spend a specific amount with a specific supplier each month without coming to you first.  Or you might give an employee an annual budget, an amount they can spend without seeking your approval.

Given the fires that may need to be extinguished after the fact, taking a holiday may seem more of a hassle than it’s worth. But if you transform the aftermath of a vacation into systems and training that allow employees to act on their own, you’ll find the vacation is worth what you paid for it many times over: your company will increase in value as it becomes less dependent on you personally.

Frank Mancieri, CFO and Exit Strategy Planning services, 401-651-15856,

Exit Planning is a Fluid Process

TenAs an owner of your privately-held business, you are the captain of your ship, so to speak.  You control the rudder and the helm, steering your business in the direction of opportunity and profitability while also avoiding dangers that could ‘sink’ the enterprise.  However, all sailors recognize that they do not also control the winds and the tides.  The best that one can do is to understand these external forces and work with what they give you.

These external factors are a good way of viewing the same external events that you cannot control with your exit planning.  As these factors change you need to adjust your plans to accommodate what you cannot control in order to achieve a successful exit from your business.  You see, exit planning – like sailing – is a fluid process and these external factors, the winds and the tides, will more often than not, be the largest determinant of success with your exit.   Therefore, this newsletter is written with the intention of helping business owners better understand how to reconcile their internal and external transaction motives to achieve a successful exit.

A Simple Example

Let’s begin with an owner whose business is doing well with record profits and that owner is looking to exit.  Well, that owner has done a good job controlling their business results.

However, if banks are not lending because of the poor economy, or buyers are not buying, or global events are creating panic in the markets, or a recession has caused fear in the markets then some or all of these external factors will impact your exit plans.  So, it is helpful to develop an opinion of these outside forces and adjust your exit planning around them.

Start at the Beginning – A Plan is Needed

Using the same sailing analogy, most sailors would not set sail for a destination without first charting a course to know where they are going, what path will get them there, and when and where they will arrive.  Business is not too different – at least in theory.  However, if you are a privately-held business owner who does not know who will own your business next and when that transition is likely to take place, then you are in the majority – most owners have not done this type of planning.  There are many reasons why owners do not plan for their exits but like the sailor who is cast adrift without a map, you and your business can certainly regain your ground and position yourself within a solid plan.

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© Copyright 2013 Pinnacle Equity Solutions, Inc

Frank Mancieri, CFO and business exit strategy services, 401-651-1585,