Adam Coffey - The Exit-Strategy Playbook: The Definitive Guide to Selling Your Business

Copyright 2021 Adam Coffey

All rights reserved.

ISBN: 978-1-5445-2302-6

This book is dedicated to the multitude of people across the globe who made my first effort, The Private Equity Playbook, a bestseller. Without your desire to expand your horizons, The Exit-Strategy Playbook would not have been possible. Your direct outreach and engagement inspired me to keep going, to push harder, and to accelerate my efforts to give back to the business community for the many blessings I have received throughout my career.

Contents

Its about that time. Youre a successful entrepreneur, but youre wondering if there is a light at the end of the tunnel. Youre becoming more conservative. Youre not as young as you once were. Bad economic news causes stress. You see other businesses getting hammered by COVID-19, and you lament the stories shared by other founders at Rotary, business mixers, or the American Legion Hall: If I had only sold sooner. Youre wondering if youre going to be in business for the rest of your life.

Ive seen these feelings many times over in the constellation of companies Ive bought through the years. These are normal feelings; theyre early indicators that it is time to do something. But what is that something?

Thats what were here to figure out.

I refer to myself as a blue-collar CEO. I left home at seventeen years old, right after graduating high school. I enlisted in the United States Army, which taught me about discipline, teamwork, and leadership and set the foundation for the rest of my career.

After military service, I worked as an engineer for a number of years, which made me a meticulous planner. Eventually, I crossed over from engineering into business and worked for ten years at General Electric, where I moved into mid-level management and learned how to run a company.

Private equity recruiters came knocking on my door, and I launched into a twenty-year career, serving as the president of three different companies. The businesses were all in different industries. One was a medical company, Masterplan, that serviced imaging and biomedical equipment in hospitals. Another was a commercial laundry firm, WASH Multi-Family Laundry, that serviced 550,000 washers and dryers located in 70,000 apartment complexes and laundromats across North America. The third business was CoolSys (pronounced as two syllables, cool sis), Americas largest specialty refrigeration and HVAC service company, touching more than 50,000 different customer locations.

All three were national private equity-backed companies that I helped grow by using a tactic known in the industry as buy and build. I start with a platform company thats owned by a private equity firm, and then I buy several other companies and combine them to build a larger company. In the four years Ive been at my current company, Ive purchased eighteen smaller companies and have three more under letter of intent as of today. Over the next four years, Ill probably buy a grand total of fifty. When Im finished, the company will sell for somewhere between $2.5 and $3 billion in enterprise value.

This process will continue with the next owner until the company eventually hits the public markets anywhere from five to ten years from now.

As a result of the positions Ive held, I know how to buy and sell companies and successfully work through the sales process. Ive become an investor in private equity funds and an advisor to others. I am frequently asked to look at businesses and offer opinions from an operational perspective. In sum total, I have bought, sold, and financed around one hundred companies in twenty years. The individual company values ranged from under $1 million to over $1 billion, with an aggregate total amount of financial activity measured at close to $5 billion.

Ive dealt with dozens of entrepreneurs who were selling their companies, so I can definitely help you sell yours. I understand how this game is played.

I get it. Youre an expert in your field. You are an entrepreneur who established a business and then continued to grow it for decades with your personal sweat equity. Youve built an empire, and you are potentially a multimillionaire, but this is no time for pride. Selling isnt just a big deal; its an art, and it takes years of experience to gain expertise. For many reading this book, this is the first time you have looked to sell. You are going to need help. Good news: I am an artist here to guide you step by step!

In my first book, The Private Equity Playbook, I primarily focused on private equity. What is it? How does it work? How has it grown over time? Who are the players? What do they do, and how do they seek out companies to partner with? How do you pick a good partner? Then finally, how do you plan to grow a business once it is a part of your portfolio?

This book is the companion to that book. You may ultimately decide to sell to a private equity firm, and if thats the case, you should definitely pick up that book! But thats not the purpose of this book.

Here, youre going to learn about all the potential buyers of your established business. Youre going to learn the process of preparing a company for sale. Hopefully youre starting this process years before you actually want to sell because there is a lot of prep work ahead of you.

But dont let that work scare you. At the end of the day, this prep work will not only accelerate a transaction when its time to exit, but it will also maximize the value that you receive at exit.

This book is not intended to provide financial advice or legal advice, steer you in a particular direction, or answer all your questions. Rather, it will help you if and when you ever decide to sell your company.

Note: Youll want to always employ the expertise of your teamattorneys, accountants, investment bankers, and morebecause the legal, financial, tax, accounting, and other business issues that you will face are very based on facts. The outcome of your sale will be impacted by laws, rules, and regulationsfederal, state, and localthe interpretation of which will be dependent on those facts. Therefore, the advice that you need can be provided only by experts who know the details of your life (especially your personal goals), your business, and the proposed transaction. Now is not the time to save on assembling your team of advisors, as we will discuss in Part Three. This book is merely a primer to help open your eyes to some of the many intricacies that you will encounter when seeking maximum value at exit. It will prepare you for the journey ahead and demystify the process so you can navigate it with better confidence and clarity.

This book assumes you are the owner of an established company with real revenue and earnings. This is not about the world of VC-backed adventures, although there are certainly nuggets of wisdom for those entrepreneurs as well. It is organized in four parts.

Part One: The Universe of Buyers and Exit Strategies. Here, youll learn about the types of buyers who may be interested in your company and the pros and cons of each.

Part Two: Prepping Your Business to Sell. In this part, youll learn what you should be doing years ahead of your sale, including cleaning up your financial reporting, dealing with any real estate the business owns, and aligning operations.