1 / 67

A Thing of the Past

One Company, One Career. A Thing of the Past. Presented by: Marvin L. Storm. The Business Landscape - 2010. Acquired. Merged. Outsourced. Downsized. Out of a Job?. Now What?. Choices: Get Another Job. Choices: Get Another Job.

brett-rose
Télécharger la présentation

A Thing of the Past

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. One Company, One Career A Thing of the Past Presented by: Marvin L. Storm

  2. The Business Landscape - 2010 • Acquired • Merged • Outsourced • Downsized

  3. Out of a Job? Now What?

  4. Choices: Get Another Job

  5. Choices: Get Another Job • Experienced people – have difficult time getting the same level of salary

  6. Choices: Get Another Job • Senior people - difficult time getting the same salary • Starting over – hard to do

  7. Choices: Get Another Job • Senior people - difficult time getting the same salary • Starting over – hard to do • Chances of being laid off again – a high probability

  8. Get into Your Own Buisness Choices:

  9. Get into Your Own Buisness Choices: • Start a business

  10. Get into Your Own Buisness Choices: • Start a business • Buy a business

  11. Get into Your Own Buisness Choices: • Start a business • Buy a business • Franchising: Start or buy an existing franchise business

  12. Get into Your Own Buisness Choices: • Start a business • Buy a business • Franchise start or buy an existing franchise • Consult

  13. Starting a Business Ingredients: • Have an Idea • Have skill set • Have a product • Have people with specialized skills

  14. Starting a Business Financing • Angel Financing • Venture Financing • MCI Plan • Personal Capital • Credit Cards –Home Equity • 401 K –SBA

  15. : The Process Buying aBusiness Finding- • Pick an Industry and Research It • Business Broker • Online Internet Research

  16. : The Process Buying aBusiness Due Diligence – The Big Why? • Research • Industry • Competition • Market 2.Survey Employees 3.Talk to Vendors

  17. : The Process Buying aBusiness Due Diligence- 4. Talk to Customers 5. Talk to CPA; yours and theirs 6. Financials; unaudited vs. audited

  18. Valuation: An Art vs. a Science Multiple Earnings- EBITA = Earnings Before Interest, Taxes, Amortization & Depreciation

  19. Valuation: An Art vs. a Science Multiple Earnings- No earnings applied to cash flow or gross margin

  20. Valuation: An Art vs. a Science Multiple Earnings- Multiple formulas vary: “Will pay 4 to 5 times EBITA if there are growth prospects and no requirements for additional capital.”

  21. Valuation: An Art vs. a Science Multiple Earnings- Multiple formulas vary: “Will pay over 5 times EBITA if net worth is 60 percent or more of the selling price.”

  22. Valuation: An Art vs. a Science Multiple Earnings- Multiple formulas vary: “Will pay 5 to 6 times EBITA for companies with a 15 to 20 percent return on investment.”

  23. Valuation: An Art vs. a Science Multiple Earnings- Multiple formulas vary: “Will pay 5 to 6 times EBITA if there are consistent earnings, good management, and company has market leadership.”

  24. Valuation: An Art vs. a Science Multiple Earnings- Multiple formulas vary: • Industrial companies 5-7 x • Initial public offerings 7-9 x • Consumer product companies 8-10 x

  25. Rule of Thumb: • If you buy a new machine for a factory, you should be able to pay for it in five years from the resulting labor savings.

  26. Rule of Thumb: • Likewise, a business should be able to pay for itself in three to five years, assuming that the earnings remain exactly the same for that period of time.

  27. Valuation: An Art vs. a Science Multiple Earnings- Benchmarking: 1. Some buyers will raise or lower their EBIT multiple for valuation purposes based on the relationship to the proposed selling price 2. Some buyers will use only multiples of 4.5 to 5 times EBIT. If book value is higher than half the selling price, some buyers will use a 5 to 6 multiple.

  28. Book Value Definition: Total Assets less Total Liabilities *Used if a company is losing money

  29. Discounted Cash Flow Discounted cash flow is what someone is willing to pay today in order to receive the anticipated cash flow in future years.

  30. Discounted Cash Flow The appropriate rate for discounting the company’s cash flow stream is the weighted average of the costs of debt and equity capital.

  31. Discounted Cash Flow For example: • If a company’s after tax cost of debt is 6% • Estimated cost of equity is 16% • Plans to raise debt capital 20% and 80% equity, it computes the cost of capital at 14% as follows:

  32. Discounted Cash Flow

  33. Service Companies Factors: • Key employees • Customer list • Business systems

  34. Service Companies Example: • $3 million of annual billings • Reconstructed net before tax of about $300,000. • Is this business worth $1.5 million (5x)?

  35. Service Companies Possibly: • More important is the payout period • Will owner will remain in the business to train new owner • Will key accounts be retained – Structured payout

  36. Condition #1: 1. Owner works for two years at base salary or for one year plus two years as a consultant.

  37. Condition #2: 2. Any loss of an account existing at the time of closing will reduce payout by 50 percent of one year’s billing of that account.

  38. Condition #3: 3. A loss in the third year will reduce the payout by 25 percent of one year’s billing.

  39. Adjusted Net Cash Flow Calculation

  40. Adjusted Net Cash Flow Calculation

  41. Adjusted Net Cash Flow Calculation

  42. Adjusted Net Cash Flow Calculation

  43. Adjusted Net Cash Flow Calculation

  44. Adjusted Net Cash Flow Calculation

  45. Adjusted Net Cash Flow Calculation

  46. Adjusted Net Cash Flow Calculation

  47. Adjusted Net Cash Flow Calculation

  48. Adjusted Net Cash Flow Calculation

  49. Apply: Type of Business?

More Related