Book: Finish Strong

"Finish Strong: Sell Your Business On Your Terms" by Scott Bushkie

Overview:

"Finish Strong" by Scott Bushkie serves as a guide for business owners contemplating the sale or transition of their business. It emphasizes the importance of planning, understanding personal priorities, and maximizing business value to achieve a successful exit "on your terms." The book covers a wide range of topics from initial considerations to practical steps for preparing a business for sale. Bushkie leverages his 20+ years of experience in the M&A industry to provide actionable advice and insights.

Key Themes and Ideas:

• Importance of Exit Planning: The book stresses that exit planning is crucial, often more important than planning other significant life events. "Over my career, I have witnessed business owners who spent more time planning for their child’s wedding, their 50th wedding anniversary, or (since I am in Green Bay, home of the Packers) their all-important fantasy football draft, than they put into planning for the sale of their business—what is often the single largest financial transaction of their life." Lack of planning leads to missed opportunities and potentially lower returns.
• Defining Personal Priorities: Sellers should identify what is truly important to them beyond just the highest price. Factors like employee protection, cash at closing, company culture, and continued involvement can influence deal structure and buyer selection. "About 50% of the time, our client will take the largest sum of money. Other sellers may take a lesser amount to leverage other points in the negotiation process, such as protecting their employees, amount of cash at closing, or the company’s culture."
• Understanding Exit Options: The book explores various exit options beyond a simple sale, including transitions to family or management, selling a majority or minority stake, and recapitalizations. Each option has its own advantages and disadvantages, requiring careful consideration. "Today when we talk about selling your business, we’re really talking about a wide breadth of options. This is not an all-or-nothing scenario: you can sell all of the business or just some of it."
• The "Conversation™" - Self-Analysis Tool: Bushkie introduces an 11-question self-assessment to determine readiness for discussing an exit strategy with an M&A advisor. This tool helps owners gauge where they are in the process of considering a sale and the urgency of their situation.
• Lifestyle Number™ vs. Net Number: A central concept is the comparison of the "Lifestyle Number™" (the financial resources needed for desired post-exit lifestyle) with the "Net Number" (proceeds from the sale after taxes and debts). A sale should only be seriously considered if the Net Number meets or exceeds the Lifestyle Number™. If not, adjustments to either the business value or lifestyle expectations are necessary.
• Market Timing: The book highlights the impact of economic conditions on business value, noting the "double benefit" of selling in an up market and the "double whammy" of selling in a down market. This reinforces the need for proactive planning and flexibility. "When you sell in good economic times, your cash flow is growing and you get more value out of your business. But multiples are also going up, so you get the benefit of rising cash flow plus rising multiples. Unfortunately, the reverse can happen in a down economy."
• Avoiding Seller's Remorse: The author discusses the common phenomenon of seller's remorse and provides tips to avoid it, including knowing what's next in life, finding one's identity outside the business, and understanding the emotional ties to the company.
• Buyer Types and Their Motivations: The book categorizes buyers into individual, financial (private equity, family offices, search funds), and strategic buyers, emphasizing that different buyers will value a business differently based on their unique synergies and motivations. "They say, “Beauty is in the eye of the beholder.” This statement is never truer than in M&A."
• Building Value Prior to Sale: Bushkie provides practical steps to enhance business value, focusing on driving cash flow, managing working capital, documenting processes, securing assignable contracts, "spring cleaning" (addressing deferred maintenance), and obtaining financial audits or quality of earnings reports. He also emphasizes developing a strong management team and diversifying the customer base.
• The Three-Legged Stool: Bushkie describes the "three-legged stool" approach to exit planning which includes engaging an M&A advisor, a CPA and a financial advisor. He adds a fourth leg, an M&A attorney, once the decision to sell has been made.

Key Quotes:

• "What I want to do is bring my 20+ years of experience (50,000+ hours) in the M&A industry to help business owners like you to finish strong and live your dream."
• "Failing to plan is planning to fail." - Benjamin Franklin
• "The more we know about what you value, the best chance we have to make that happen."
• "You are more than your business."
• "Your business value isn’t based on what it’s worth under your leadership—it’s based on the company’s transferrable value."

Target Audience:

The book is aimed at business owners, particularly those in the lower-middle market, who are considering selling or transitioning their businesses in the near to medium term. It is also valuable for advisors who work with business owners, such as financial planners, CPAs, and attorneys.

Actionable Insights:

• Take "The Conversation™" self-assessment to gauge your readiness for exit planning.
• Define your "Lifestyle Number™" and compare it to a realistic estimate of your "Net Number."
• Identify your personal priorities beyond just the sales price.
• Develop a value enhancement plan to maximize your business's attractiveness to potential buyers.
• Build a strong relationship with your M&A advisor, CPA and financial advisor.

Overall Assessment:

"Finish Strong" provides a comprehensive and practical guide to navigating the complexities of selling a business. Bushkie's insights, drawn from extensive experience, combined with actionable advice and relevant examples, make this a valuable resource for business owners seeking a successful and fulfilling exit.

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