A recent comment on an online forum I belong to had to do with a majority business owner wanting to buyout a minority owner whom was, and I paraphrase, “Not a team player” and needed to go. There was a difference of opinion between the two on the value of the shares.
My comment was, “Welcome to my world.” Most owners don’t understand that their small business won’t sell for the same multiple (of profit, EBITDA or cash flow) as a large corporation will sell for. Too many buyers hear someone say they should pay for the value of the assets not the “blue sky.”
The bottom line is that businesses sell within a set range based on a companies size, warts, potential, efficiencies and buyer fit. That set range is different for different size companies (larger firms sell for a higher multiple than smaller ones, all else being equal).
Education is one of the three key components to getting a deal done (along with motivation and relationship). Rarely is a business so special that it will sell for more than it should, based on history, norms and guidelines. Of course, every owner thinks his or her business is that special case just like every homeowner thinks his or her home is worth more than the one down the street.
I recently returned from Antigua on our annual Rotary service project. While there we were incredibly busy on weekdays, almost as busy on weekends and the Internet connection was sporadic at best.
For 12 days the only news I got was the headlines I scanned in the daily emails I get from three newspapers. What a nice diversion to not be engulfed in the news. I get almost to that point when at our cabin. While there I try to keep up without getting into the details.
The good news is the world didn’t collapse because I wasn’t “up to speed” on all issues. The bad news is that all of the trauma and terror continued; including the tornados that devastated the Midwest the day we were flying home.
It really is refreshing to not be bombarded by all that’s going on. The noise level was a lot lower and I don’t feel like I missed much.
I just returned from our annual Rotary service project in Antigua and Barbuda. It was our most ambitious, busiest and most successful project to date. As always, we traveled with Jeff Mason, Cisco Networking teacher at Newport High School, 15 high school students and others.
We successfully installed a video conferencing system between the State College on Antigua and the secondary school on Barbuda. They will use it for teacher training because it’s a three hour ferry ride each way and thus the Barbuda teachers don’t get full training. They will also be teaching to Barbuda, starting with a math teacher whom will do Saturday classes using this system.
We installed eight new computer labs and made upgrades to older labs. The good news is that these labs are being used and well maintained. One day we had to interrupt a class to do the upgrades. Jeff was impressed with the teaching on the computers.
The big hit was the sewing classes my wife Jan and two others taught. The room is overflowing, there was a lot of excitement and they were on TV and in the paper. I compare this to micro-lending with it being skills-teaching instead of small loans.
We also distributed most of our 1,500 illustrated dictionaries (one to each third grade student) and monitored the First Move chess program from America’s Foundation for Chess (www.af4c.org).
Finally, Jeff, all the students and I were on Good Morning Antigua on February 20, 2012. The kids did a great job. They were all in their bright purple team shirts and made a striking impression.