Inside the Deal Room: Understanding Earnings Quality Before You Sell

transaction planning May 29, 2024


Selling your business is a monumental decision that involves careful consideration and strategic financial preparation. In the latest episode of THE EXIT Podcast, our guests delved into the crucial role that Quality of Earnings (Q of E) plays in this process. Brett Dearing CEPA, CMAA, Host of The Exit Podcast and guest Corey Massella from UHY LLP, Certified Public Accountants provided invaluable insights on how Q of E not only garners the seriousness in potential buyers but also significantly beefs up the eventual selling price. Let's dig deeper into their discussion and understand how to optimize your business's financial health before a sale.

The Importance of Preparing Financially

When the decision to sell looms, a preemptive strike is your best defense. As Brett highlighted, preparing financially isn't just about sprucing up your earnings on paper; it's about conducting thorough due diligence with an eye toward turning every stone and closing...

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Three Common Pitfalls To Avoid When Selling Your Business

exit planning May 24, 2024

Three Common Pitfalls to Avoid When Selling Your Business

In a recent special edition of THE EXIT Podcast, host Brett Dearing delved into the common mistakes business owners make when preparing to sell their businesses. From financial preparedness to post-transaction planning, Brett shared invaluable insights for navigating the sale process successfully. Let's explore key takeaways from the episode and delve into strategies to maximize the sale of your business.

1. Lack of Financial Preparedness
One of the recurring themes highlighted by Brett is the lack of financial preparedness among business owners. Without organized and updated financials, preparing a company for sale becomes a daunting task. Potential buyers rely heavily on financial data to assess the value of a business. Therefore, ensuring your financial records are accurate, audited, and in order is crucial for a smooth sales process.

2. Developing a Transition Plan
Another critical aspect that business owners often overlook...

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Unveiling Valuation Mysteries: Navigating Business Transitions

exit planning Apr 10, 2024

[Link to podcast episode below]

Business valuation is not just a number-crunching exercise; it's a strategic tool that is central to a business owner's exit planning strategy. Valuing a business can be compared to a captain of a ship knowing the vessel's exact position before setting course for the next destination. For business owners, understanding the worth of their business is essential for making informed decisions about their future and the legacy they wish to leave behind.

The 'why' of business valuation often relates to the appropriate timing of an exit. Business owners typically toil for years, even decades, to build their business. However, it is a common pitfall to neglect valuation until a sale is imminent. This oversight can result in leaving significant money on the table during negotiations. As discussed by the host, Brett Dearing CEPA, CMAA in THE EXIT Podcast, many business owners leave 15% to 25% of their business value behind, a costly mistake that...

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Exit Planning: A Roadmap to Success

exit planning Mar 26, 2024

As a business owner, one of the most significant milestones you will encounter is the transition of your business, better known as 'The Exit.' This whitepaper will explore the importance of exit planning as outlined in THE EXIT Podcast, particularly in the episode featuring Brett Dearing. We will delve into the essential aspects of preparing for a successful business sale, the role of qualified advisors, and the impact of these preparations on the transaction value.

The Stakes of Negotiation

Brett Dearing emphasizes that business owners, despite their subject expertise, often leave significant value on the table when exiting their business. It is estimated that between 15% to 25% of business value can be lost due to poor negotiation strategies. The whitepaper will discuss strategic planning tools like the Certified Exit Planning Advisor (CEPA) program and why assembling a team comprising accountants, trust and estate attorneys, M&A attorneys, and investment bankers is crucial...

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Navigating Growth Today As A Business Owner

growth planning Feb 21, 2024

Are you looking to propel your business to staggering new heights? Brace yourselves for our latest "THE EXIT" podcast episode, aptly titled "Navigating Growth." This episode is a treasure trove of wisdom, strategies, and real-world advice that you don’t want to miss!

Featured Expert: Brett Dearing – A maestro of maximizing business value, Brett brings over three decades of experience aiding business owners in transforming their operations and ensuring they're primed for transition or selling to the highest bidder.

Crucial Growth Takeaways:

  • 3:1 Revenue Formula:** Discover the gold-standard ratio for expenses to revenue and supercharge your business’s earning potential.
  • Cash Flow Mastery:** Learn how to estimate and manage the cash flow needed for achieving those ambitious revenue targets.
  • Advisory Brilliance:** Embrace the transformative power of an advisory board for accountability and exponential growth – starting informally can lead to remarkable...
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Six Questions You Should Ask Before You Sell

(Free Download Below)

Preparing for the Transition Milestone

The final milestone stage for a business owner is the Transition Stage. This stage demands that most planning by you as a business owner. It is also the stage that not only has the greatest potential impact on you as the owner, but also your family. The process of preparing for the Transition Stage and the possible impact a transition could have on your family can be overwhelming, that is why it is important to start the planning process well before you decide to sell. This gives you confidence in understanding what your transition strategy, options, and outcome will be before that time comes.

What most business owners do not realize is the timing of your exit is out of your control. If that is the case, not having a transition strategy mapped out ahead of an untimely exit could mean the difference between being able to sell your business or not. As an owner you want to have control over when you want to sell and...

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Is The Sun Setting In 2021 On Current Tax Benefits For Business Exits?

tax planning Aug 06, 2021


Now that the election is over and President Elect Joe Biden has will be the 46th United States President, there are proposed tax changes that you as a business owner should be aware of. Many advisors are taking a wait and see view on what changes will actually be enacted but we think that you should do your homework and make sure you are prepared.

What are the key points you should know?

  1. If any or all of the proposed tax changes are enacted, they could take effect retroactive January 1st 2021. Now as one of my colleagues, who is a tax attorney shared with me, the last time a tax change that was enacted was retroactive to January 1st was 1993. 
  2. With stimulus soon to increase past $3 trillion and a Debt to GDP deficit of 136%, it is certain that there will be some kind of tax increase needed to pay down debt accumulated over the past 4 years. 
  3. These proposed tax changes can impact your ability to amass wealth and transfer it to your heirs.

What are the key impact of...

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Qualified Small Business Stock (QSBC): Leveraging Powerful Tax Savings Strategies

tax planning Jul 08, 2021

If you thought watching your refund add up on Turbotax was fun, wait until you learn about Qualified Small Business Stock (QSBS). While this regulation—also referred to as Section 1202—has been around since the 1990s, recent updates to its legislation have made it much more attractive to entrepreneurs, investors, as well as some employees. Essentially, QSBS allows shareholders to avoid capital gains tax entirely upon the sale of their shares. This exclusion saves shareholders thousands, in some cases millions, of dollars in taxes.

QSBS can get complicated quickly, so let’s start with some key terms and an example:

  • Cost basis: the original value of an asset for tax purposes, usually the purchase price
  • Capital gains: the positive difference between the sale price of the asset and its original purchase price (cost basis)

In 2012, Paige founds Startup Inc. The company is valued at $2 million and Paige owns 100% of the shares. She pays $0.10/share so her...

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Managing The Key Value Drivers in Your Business


(Free download at the end of the article)

When running the day to day operations of your business it can be difficult to find time to contemplate the value of your business. The value of your business is called “Enterprise Value” and yes, you can increase that value with proper planning. Many business owners I have interviewed after the sale of their business did not understand the value of their business before the sale or the key components effecting the business value. The owners lack of understanding in these areas negatively impacted the value of their business at sale despite how well the owner thought they managed and ran the business. As you get closer to that day when you start thinking about selling your business it is important to understand how these components can impact your business. You should also have a strategic plan focused on improving these components hence maximizing the “Enterprise Value” of your business.

Value Drivers and Exit...

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Avoiding Seller's Remorse: Don't Be The Business Owner That Is Afraid To Sell


(Free download at the end of the article)

As a business owner, do you ever catch yourself asking the question “What am I going to do after I sell the business”? Finding the answer to that question is something that should be done sooner than later. To be specific, as the owner you should have a Personal Exit Plan at least 2 years before you actually begin to research the process of selling your business. When I share this with owners their response is “this sounds good but why should I take the time and resources to formulate a Personal Exit Plan”? In short my response is, “For peace of mind and the ability to move on after the sale of the business. 73% of business owners have “Sellers Remorse” within twelve months of selling the business which means they have not emotionally moved on from the sale of their business.

In speaking with and interviewing owners who went through the sales process many said they felt some type of remorse....

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