Foreword xi
Preface xv
For Sellers xv
For Buyers xvi
Acknowledgments xix
Chapter 1 The Basics You Need to Know 1
Avoiding the Critical Mistakes 1
Valuation: The Great Debate 4
Assessing What You Have Built (or Are Acquiring) 6
Who Is Selling? Transition Strategies by Ownership Level 11
Overcoming Attrition: Public Enemy No. 1 14
What Is Being Sold? 17
Organizing the Marketplace 20
Exit Plans versus Succession Plans versus Continuity Plans 23
The Planning Continuum 28
Chapter 2 Value and Valuation Fundamentals 31
An Overview 31
What Creates Value? 33
Standards of Value 35
Valuation Approaches and Methods 38
The Rule of Thumb Method of Valuation 46
Application of Standards and Approaches 48
Making Sense of It All 51
Who Is Qualified? (to Offer an Opinion of Value) 53
Valuations for Bank Financing 54
Chapter 3 Solving Valuation 57
The Blue Book Standard 57
Lessons Learned 58
A Value Calculation 60
How It Works 61
Recurring versus Nonrecurring Revenue 65
Assessing Transition Risk 66
Measuring Cash Flow Quality 68
Fixing the Fracture Lines 69
The Profitability Issue 71
Chapter 4 Building and Preserving Value toward the End of Your Career 75
1. Get a Position Fix 77
2. Focus on the “M” in M&A 78
3. Obtain a Formal, Third-Party Valuation 79
4. Understand the Impact of Terms and Taxes on Value 80
5. Consider Alternative Strategies: Sell and Stay Opportunities 81
6. Study Reliable Benchmarking Data 84
7. Create a Plan and a Definitive Timeline 85
8. Have a Backup Plan 86
9. Sell on the Way Up! 87
10. Focus on You 88
Chapter 5 Preparing to Sell 91
What’s Your Plan? 92
Finding the Very Best Match 95
When to Sell: Timing That Final Step 98
In a Nutshell: How to Sell Your Book, Practice, or Business 101
The Listing Process 107
Making a Quick Decision to Sell 112
When Selling Isn’t Selling 113
Ten Things Buyers Will Want to Know 115
Handling Key Employees during the Selling/Listing Process 116
Letting Go 118
Chapter 6 The Buyer’s Perspective 119
A New Direction 119
If at First You Don’t Succeed . . . 121
Build a Base for Acquisition 122
What Sellers Will Want to Know 124
Understanding the Audition Process 126
Are You a Buyer or a Prospect? 133
Nontraditional Acquisition Strategies 134
Chapter 7 Deal Structuring: Payment Terms, Taxes, and Financing 143
Seller Financing 144
The Shared-Risk/Shared-Reward Concept 145
Performance-Based Promissory Notes 147
Earn-Out Arrangements 148
Revenue Sharing or Fee Splitting Arrangements 151
Earnest-Money Deposits 152
Down Payments 153
Basic Tax Strategies 154
Installment Sales 156
Asset-Based Sales/Acquisitions 157
Stock-Based Sales/Acquisitions 161
Bank Financing 164
The Mechanics of the Process 166
Blending Seller and Bank Financing Together 169
Acceleration Options 170
Working Capital Loans 171
Chapter 8 Due Diligence and Documentation 175
Conducting Due Diligence 176
Assembling and Managing Your Team 181
Advocacy versus Nonadvocacy Approach 183
Documenting the Transaction 184
Chapter 9 Key Legal Issues in the M&A Process 197
What Exactly Is “Boilerplate”? 198
Reps and Warranties 199
Covenants and Conditions 202
Indemnification and Hold Harmless Clauses 207
Protections against Death or Disability 209
Default Provisions 210
Resolution of Conflicts 213
Basic (but Not Trivial) Legal Issues 215
Chapter 10 The Transition Plan 223
Regulatory Issues 224
Transferring Fee-Based Accounts 232
Setting Up for the Post-Closing Transition 233
E&O Insurance (Tail Coverage) 235
Sample Client Letters 236
Conclusion 247
Appendix: Sample Documents 249
About the Author 279
About the Website 281
Index 283
