The MHEDA Journal - Second Quarter, 2016 - (Page 54)

CONvENTiON consoLiDATion SpEaKEr What's Your Exit Strategy? i BY MIcHAEL MARKS, INDIAN RIVER cONSULTING GROUP 've worked with dealers and suppliers in this industry for decades, and conducted multiple studies. The rate of change has never been greater than it is now. In particular, we're witnessing an escalating pace of consolidation that is forcing the hands of many dealers in the industry. The time to start thinking about your next steps is not when you receive an offer to buy your business - whether from a competitor, a complementary dealer or an OEM. Instead, go away with your executive team and play the "What if?" game now. What if a primary supplier approaches you with an offer? What if something unplanned happens to the owner? What if we lose a key line? The kiss of death is denial. If you don't have a plan, you are a target. You don't have to change anything you're Convention Speaker doing today, but you do have to think through your alternatives in advance, and make small steps to prepare yourself so that you're in a strong position when you need to pull the trigger. In my MHEDA presentation, "Industry consolidation and Your Exit Strategy: Opportunities and Threats," I'll talk about why it's important to conduct a Strategic Alternative Analysis for your business in light of the change in the industry. Here are some of the drivers of change - many of which are driving consolidation - that you need to consider as you plan your next steps: Aging Industry The wave of Baby Boomers who started their businesses 20 or 30 years ago are looking to retire. Many have not planned ahead, leaving the business in disarray or positioned for a quick sale. Learn from them. Eventually, you must decide what happens next. And if something unexpected happens, don't leave it to a distraught spouse or children to determine the path of your company. Your exit strategy can be determined far ahead of time. You have multiple options: Pass the business to your offspring. There are right ways to do this, but 54 MHEDA | sometimes "love" gets in the way of seeing competence. Don't confuse the transition of ownership with the transition of management. You may be able to pass it on to your son or daughter, but they may be too young or inexperienced to run the company. So instead you may set up temporary management in the case of your passing or sudden change. And set up a board of directors to manage the transition and serve as an outside check and balance. Transition to professional management, but maintain family ownership. If you've spent a few decades building the business, but have no one in the family to pass it to for management, recruit professional management. And set up a well-functioning board if you haven't already. If you die, the outside directors will know your wishes. The bottom line: Design your business to survive beyond the entrepreneur. You could theoretically keep the business in the family for generations. Sell. Selling plays into the more recent boom we've seen in industrial markets. If you want to create a liquidity event, there is and has been an excess of private capital available to invest. In addition, strategic buyers - other dealers, OEMs - also continue to spend to grow market share in a relatively slowgrowth market. Surfeit of Capital Looking to Invest The next two years are going to be a really good time if somebody wanted to sell their company, because there's more available capital to invest than there are companies to buy. Private equity firms in particular need to

Table of Contents for the Digital Edition of The MHEDA Journal - Second Quarter, 2016

Chairman’s Perspective
From the Desk of Liz Richards
Editor’s Note
Ask Your Board
MHEDA University Calendar
MHEDA Member Profile
Women @Work
Industry Puluse
Teamwork and Personal Accountability
Exhibitors' Showcase Product Guide and Floor Plan
Exhibitor Summaries
Global Citizenship
Six C-Level Cyber Blunders (And Solutions)
What to Look Forward to in 2016
How to Build a sense of Community for Your Business
Women Mean Business
What's Your Exit Strategy?
Creating Great Customer Experiences: Why, How and Why Now?
Turning Near Misses into a Winning Safety Environment
Too Much of a Good Thing
Matuson's Sixteen Workplace Predictions for 2016
New Members
Spotlight on Association News
MHEDA Milestones
Index of Advertisers by Product Category
The Last Word

The MHEDA Journal - Second Quarter, 2016