Features of a Great Corporate Culture

There are a few attributes that all leading corporate cultures share, things like trust and respect. These foundational elements help empower employees, which is something we’ve covered a lot here on The Private Business Owner.

There are also a few things that great corporate cultures are lacking, namely unproductive employees. Slackers not only fail to get any work done but they also bring down morale – negatively impacting the positive environment management works so hard to foster.

Another Reason To Create A Great Corporate Culture

Having a great culture corporate is important for a variety of reasons: it helps motivate employees; it leads to more ethical behavior; and potential new hires factor it into their decision-making process. All of these things contribute positively to the bottom line.

But there’s another benefit to a great corporate culture that you can add to the list: It results in fewer information leaks.

A few weeks ago writer writer JP Mangalindan recounted a story from LinkedIn CEO Jeff Weiner.

The question: Why hasn’t LinkedIn been the victim of numerous news leaks over the years? Weiner chalks it up to his company’s transparency.

“I’ve come to learn there is a virtuous cycle to transparency and a very vicious cycle of obfuscation,” Mangalindan quotes the tech CEO as saying.

A Universal Lesson in Trust

How right the LinkedIn CEO is. Let’s think about a similar situation that everyone’s experienced.

At some point in time when you were a kid, I’m willing to bet you overheard your parents talking about something that they didn’t want to discuss with you. When you asked them about it, they refused to tell you anything, insisting that you were too young or giving you some other equally frustrating standard parental response.

How did you feel when this happened? What did this inspire you to do?

Depending on your age, I bet you were curious about the forbidden topic and possibly angry and resentful that they wouldn’t trust you with the information. Your next goal was probably to learn as much as you could about the topic of conversation to get back at your parents. Tell me if this sounds familiar: “I’m going to show them. I’ll find out exactly what they didn’t want me to know.”

When a company’s “parents” (a.k.a. leaders) refuse to share information with their employees, they’re showing that they don’t trust the staff. This breeds hostility, resentment, and sometimes a need for revenge, especially if the CEO clamps down and shares even less information.

And that’s Weiner’s point. Transparency, which he claims is part of his company’s corporate culture, prevents a lot of this ill will and the desire to leak confidential information to the media or competitors.

Of course, I am not suggesting that you share all information with your employees.  Some items are important to guard and protect. However, the more you can share about how your company is doing, the more buy-in you will get from your employees, creating an environment where your employees know that you trust them. Generally speaking, employees who feel trusted perform far better than those that aren’t.

In fact, honesty about company performance can also help when times are tough because employees understand why cuts or downsizing are being implemented. It is a fine line to walk, but companies that have a positive corporate culture usually have leaders proactively sharing with employees, especially those staff members that are key to the success of the company.

© 2013 Generational Equity, LLC All Rights Reserved

What can you do today so that your business will be appealing to buyers when you want to sell it? Learn when you download a free copy of Building and Exiting a Desirable Business today.

Deal Making Trends

Carl Doerksen finds the answer to the question: Why haven’t deal making trends driven M&A activity back up to pre-recession levels?

M&A Trends in 2013

“[T]he end of 2012 witnessed a flurry of deal closings at a record pace … So now the question on everyone’s mind is this: Where do we go from here? What M&A trends will drive activity this year?”

Dry Powder and 2013

A few weeks ago, Axialmarket – the largest network of qualified deal professionals in the world – released a report examining key trends that would impact deal making in 2013 and beyond. In the report they identified nine trends, all of them equally critical. However, there was one that was most compelling.

© 2013 Generational Equity, LLC All Rights Reserved

Want to learn about common mistakes business owners make when selling a business? Then read Generational Equity’s complimentary whitepaper, 5 Mistakes To Avoid When Selling Your Company. 

“A few days ago we examined the fact that private equity firms are sitting on nearly $350 billion in dry powder (committed capital) and that nearly $100 billion of it needs to be invested in the next 12 months or it will have to be returned to investors. I recently came across another source that not only looked at dry powder but also cash rich strategics.

The following chart from PwC’s Year End M&A Outlook for 2013 indicates that worldwide all private equity funds have more than a trillion in committed capital, while cash rich strategics are sitting on close to $2 trillion.”

Once the decision has been made to sell a company, many business owners don’t know where to start. Since the process can be complex, in this piece we outline the 17 steps it takes and provide a few things to remember along the way.

© 2013 Generational Equity, LLC All Rights Reserved

Want to learn about common mistakes business owners make when selling a business? Then read Generational Equity’s complimentary whitepaper, 5 Mistakes To Avoid When Selling Your Company. 

Why Google+ Matters

While Google’s previous attempt at social media (Google Buzz) failed, Google+ will be here for the long haul. Even though the newest Google social media platform did not immediately impress after its summer 2011 launch, the company has indicated that the product is essential to the future success of its core product – which everyone uses every day – its search engine.

For example, one way that Google is already leveraging the social media platform to enhance its search product is through its authorship function. To reduce the amount of spam in search results, Google is allowing people to “claim authorship” to the articles that they’ve written.

By claiming authorship, Google is connecting content with its source, adding a layer of credibility. This transparency will make it harder for spammers to game the system and will provide better quality search results for its users

Another reason why Google+ matters to business owners is its position in the search market. We know that no one is close to overtaking the search engine giant, as its market share was most recently reported at 65.2% in December of 2012. With this in mind, listening to the direction Google wants to take will help guide businesses decision-making processes regarding their online practices.

Bottom Line: If the market leader in search engine technology is telling you that Google+ is important to them, it’s wise to make Google+ a priority in your marketing strategy if your business has any kind of online presence.

How To Get Started on Google+

To get going on Google+, visit https://plus.google.com/. You’ll log in with your Google account or create an account if you don’t already have one.

Just a note: In order to do anything on Google+ for your business, you must have a personal Google account. Everything on Google+ is tied to a person – this is one way Google is adding credibility to its search results.

After you’ve set up your personal Google+ account, there are two things that should be part of any company’s marketing strategy:

1. Creating a Google+ Page for your business
2. Claiming authorship of your blog posts

There are mistakes to avoid for each of these action items, so do your research first. I’ve included a couple links above to help you get started, but hiring a professional or spending 15-30 minutes researching the best and most efficient way to do these steps will be helpful before you implement them in your marketing strategy.

As a bonus, here is an infographic with 64 Google+ content strategies courtesy of Maria Peagler.

Like this infographic? Grab a proven framework for content marketing that works from Copyblogger.

Is there anything else you’ve found to be helpful for your marketing strategy on Google+?

© 2013 Generational Equity, LLC All Rights Reserved

What can you do today so that your business will be appealing to buyers when you want to sell it? Learn when you download a free copy of Building and Exiting a Desirable Business today.

Private Equity Overhang and the Hurdles PE Firms Face

“Several times during the past few months we have seen estimates regarding the size of the private equity overhang. This refers to the amount of capital committed by investors to equity firms for investing purposes. When private equity funds are created, most have limited lifetimes. That means that fund managers typically have 5-7 years to invest the private equity overhang, or they have to send the capital back to their investors. Since they really don’t like doing this, the size and the vintage age of the private equity overhang really does matter.

Recently Pitchbook, a leading research company that tracks equity and venture capital fund activity, updated their estimate of the private equity overhang.”

How Do You Value A Business?

“Business valuations are one of the toughest challenges business owners face. Since the majority of owners only own one business in their professional lives, many don’t have the experience or expertise needed to arrive at an accurate valuation. And since most of your net worth is tied up in one asset, having an accurate idea of its worth is critical.

Here are the three big-picture steps to give you an idea of how to value a business.”

What An Exit Strategy Is And How To Plan One

“Crafting an exit strategy is one of those things that many private business owners know they need to do but rarely get around to doing.

In fact, according to a study conducted by Whitehorse Advisors, “Ninety-six percent of baby boomer business owners agree that having an exit strategy is important, but 87 percent do not have a written, current exit plan.”

Today we review what an exit strategy is, why it’s important, and how to plan one.”

© 2013 Generational Equity, LLC All Rights Reserved

Learn what you need to know about preparing your exit plan. Download a complimentary whitepaper from M&A advisory firm Generational Equity called Exit Planning Basics: What You Need To Know Before You Start. 

Private Equity Investments

“As many of you will recall, during the last election cycle, the private equity industry was discussed, examined, and, in some circles, criticized more than ever before. The reality is no industry was more vilified by outside sources with little knowledge of the key role it plays in our economy than any other over the year leading up to the election.

Even though lots of folks don’t want to admit it, no matter what political party you belong to, the truth is private equity plays a key role in the health and expansion of our economy.”

Click here for the full article.

Selling A Business – How Much Is My Company Worth?

Find out what it takes to determine  your company’s value.

Click here for the full article.

Projected M&A Activity

Carl Doerksen identifies major trends from AxialMarket’s 2012 Review and 2013 Outlook M&A Activity Report, including anticipated deal volume and whether professionals expect inflation/deflation of valuations.

Click here for the full article.

© 2013 Generational Equity, LLC All Rights Reserved

Want to successfully sell your business for the optimal amount? Then you need know everything about valuations. Start by reading Generational Equity’s complimentary whitepaper, Selling A Business – Part I: The Evaluation.

Post-Election Pessimism: What Small Business Owners Can Do About It

After discussing the latest results of the Wells Fargo Small Business Index, Carl Doerksen shares the options that business owners have.

The Impact of Interest Rates When Selling A Business

“Most business owners are unaware that a good portion of deals that close include some component of financing. Certainly the days of the highly leveraged deal, where 10% was put down and 90% was financed, are long gone. Lenders learned the hard way what happens to that type of financing when the economy goes south.

However, since the financial crisis ended, we have seen a gradual increase in the availability of financing to close deals, which is good news for business owners who are interested in selling a business. If lenders have become more willing to finance deals, the odds of deals closing go up.”

© 2013 Generational Equity, LLC All Rights Reserved

What can you do today so that your business will be appealing to buyers when you want to sell it? Learn when you download a free copy of Building and Exiting a Desirable Business today.

Where do you start, especially if you’ve never gone through the process before? I’ve rounded up three proven M&A truths that are constantly echoed in the mergers and acquisitions industry.

If you’re a private business owner looking to exit your company, heed these words as you dive into the lengthy process. 

M&A Lesson 1: One buyer is no buyer.

“Wait a minute,” you might be thinking. “If someone is interested in my business, I should be ecstatic.”

Yes, it is good to have an interested party. But when you only have one interested buyer, you could:

• Sell to the wrong buyer.
• Allow them to strong-arm you into a deal structure you don’t like.
• Leave money on the table.

When selling a business, you want to create what’s known as a limited auction. This is when two or more interested parties bid against one another for your company.

In a limited auction, the price of your business increases, allowing you to walk away with more money than if you just had one buyer.

Yes, one interested party is good. But having multiple buyers is even better.

M&A Lesson 2: “The buyer rarely buys what the seller thinks he’s selling.”

Management guru Peter Drucker is to have famously said the above quote, and it couldn’t ring truer in the M&A industry.

Here’s the problem that many run into: What you as a business owner consider most valuable about your business is not necessarily what a buyer or strategic acquirer may find as valuable. To get top dollar, you must put yourself in your potential buyer’s shoes and figure out what they will benefit from the most if they buy your company.

Oftentimes, strategic acquirers will want to purchase a company because it complements an existing business they own. In this case, certain things like a patented process or regional territory could be worth a premium to the buyer.

Truly understanding what buyers are looking for is such a mind shift for most private business owners that M&A advisory firm Generational Equity has crafted a complimentary whitepaper about how to identify intangible assets to get maximum value out of your sale when marketing your business.

And Lesson 2 brings us to…

M&A Lesson 3: Buyers buy future earnings, not past.

It’s great that you’ve grown your business from nothing into the empire that it is today. That’s a remarkable feat that not everyone can achieve.

While buyers will study your past and use it to determine the stability of your business, they are chiefly concerned with the future. They’re interested in how your business will help them after they close the deal.

Canyour company help increase the buyer’s revenue stream post-acquisition? How will your company help them make more money in the future? These are the questions that buyers will concentrate on. So be prepared to explain your past, especially any fluctuations in revenue or earnings, but be ready as well to sell your future.

***

Selling a business is an experience of a lifetime. Keep these three sayings in mind as you embark on your adventure.

© 2013 Generational Equity, LLC All Rights Reserved

Want to learn about common mistakes business owners make when selling a business? Read Generational Equity’s complimentary whitepaper, 5 Mistakes To Avoid When Selling Your Company. 

The Fiscal Cliff Averted – Now What For Private Business Owners?

“The news on Jan. 2, as you well know, was good. Through last minute wrangling, the so-called Fiscal Cliff was averted. Agreement was reached on tax increases for the wealthy and a number of other issues. The significant impact of tax increases on everyone and required spending cuts were both avoided. Or were they? Essentially the agreement postpones the most painful issues we face: spending cuts and the debt ceiling.”

Economic Trends – Insourcing and What It Means To Manufacturers

“A few weeks ago we published an article that examined some very positive long-term news regarding the country’s eventual position as a leader in oil and gas production, which would reduce our dependence on foreign sources of oil over time. Now we have come across another trend that bodes well for the U.S. economically: the ‘insourcing’ of manufacturing jobs.”

Capital Gains Taxes – Beyond 2013

“The agreement reached by Congress a few weeks ago to avoid the tax implications of the Fiscal Cliff finally provided the business community with some clarity on taxes for 2013. The American Taxpayer Relief Act (ATRA) addressed the tax components (revenue) side of the equation, but decisions regarding the spending side will be delayed for two months.

As the search for new revenue expands, how high could capital gains taxes go? And what implication does that have for owners of privately held companies?”

© 2013 Generational Equity, LLC All Rights Reserved

What can you do today so that your business will be appealing to buyers when you want to sell it? Learn when you download a free copy of Building and Exiting a Desirable Business today.

“Since the economic and political news in the U.S. continues to be rather unsettled despite an agreement on avoiding the Fiscal Cliff, I thought I would glance to the north and see waht we can expect in 2013 for Canadian mergers and acquisitions trends. It turns out the news up there is really positive.”

The Middle Market Leads the Way To Economic Recovery

“It has often been said that the engine of our economy, indeed of any free enterprise economy, is driven by the passion and vigor of entrepreneurs. These are the folks that risk it all to pursue a dream or new idea, and establish a business along the way. Having worked with entrepreneurs for years, we have learned that without them, our economy and our very way of life would look completely different.

The optimism of this group is also vital to our economic recovery.”

AxialMarket’s Industries to Watch in 2013
M&A activity overall is expected to increase in 2013. To gain a better picture of which industries will be very active, AxialMarket’s Cody Boyte identifies six sectors to keep an eye on.

What To Expect in 2013 If You’re Selling A Company

“In much of the post-election doom and gloom in the business press, Dan Primack, a writer for Fortune online, conducted a little-publicized interview with an M&A insider on the impact of the election, specifically the effect of President Obama’s reelection on M&A activity in 2013. Their discussion was interesting because despite all of the hand wringing, Dechert LLP M&A attorney Bill Lawlor is fairly upbeat.”

© 2013 Generational Equity, LLC All Rights Reserved

What can you do today so that your business will be appealing to buyers when you want to sell it? Learn when you download a free copy of Building and Exiting a Desirable Business today.