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A 2013 study entitled State of Owner Readiness, prepared by the NE Ohio Chapter of the Exit Planning Institute, found that 83% of those surveyed did not have exit plans. This includes a plan on how to maximize the value of a business before going to market. Other contributors in this study were Grant Thornton, PNC Bank and the Ohio Employee Ownership Center at Kent State University.

Some revealing points of the study included:

  • 41% of those in the 50–59 age group and 69% of those in the 60–69 age group planned to transition their businesses in the next 5 years.
  • 78% had no formal transition team of advisors in place.
  • Only 14% of the owners had completed a formal, pre-transition value enhancement and/or preliminary due diligence project in the last two years (or have one underway presently) to de-risk the business, maximize its value, or minimize taxes upon transition.
  • Respondents chose accountants (33%) as their “most trusted advisor,” followed in order by spouse (16%) and attorney (12%).

Here are some highlights from a related PowerPoint presentation on “How to Maximize the Value of Your Business”:

1. Report all income.

2. Do not run personal expenses through the business or bury those expenses as office supplies or cost of sales – eliminate personal meals, entertainment, and travel; any cellphones of your family members that might be run through the business; personal “toys” that are expensed to the business; your home utilities through the business, etc.

3. Look for any customer that represents more than 10% of total sales and reduce this.

4. Sales should be steady or growing. Do what you have to do to make that happen.

5. Clean up your A/R, write off bad debt, and evaluate customers whose payments continue to run over 60 days late.

6. If you have been running the expenses for your personal vehicle(s) through the business – lease, insurance, repairs – consider keeping track of daily mileage and charging per mile. The bank will not allow this expense to be added back to SDCF.

7. Understand what debt-coverage ratio is and how it will affect a buyer’s ability to get long-term funding for the buyer.

8. If you have phantom employees, get rid of them!

9. If you have 1099 employees who will not stand up to the IRS qualifiers, put them on payroll and deduct taxes from their pay.

10. If you have an active partner (including a spouse), an adjustment to SDCF will need to be made to replace your partner at Fair Market Value.

11. Look to have the business run by employees, so the business is not “you.”

12. Do everything you can do to increase EBITDA. Every dollar you can increase EBITDA is worth a multiple of two or more to you when you go to market.

13. Be sure to document the systems and procedures of the business to aid in the transition process and add value to your business.

14. Avoid making major capital investments unless they make good business sense; let the new owner decide what to buy.

As with selling your home, there are steps you can take ahead to time to increase the dollar value of your business, find and head off issues that will come up in the business assessment (inspection), and improve perceived value (curb appeal).  To view the Seminar PowerPoint presentation entitled “Selling Your Business for Maximum Value” visit

If you would like a confidential, no-obligation analysis and discussion of what you can be doing now to prepare for when you are ready to sell your business, please call (888-893-6661) or e-mail me ( I serve customers nationwide. To learn more about my background and see customer recommendations, visit my LinkedIn profile at