Surety Bond Quarterly - Fall 2017 - 23

owner plans for his or her eventual
exit, the more likely he or she will do
so successfully.
Failing to do so may potentially
leave the owner in a position one day
when he or she has to make the decision to liquidate the business that the
owner has worked so hard to build.
And not only will that choice affect
the owner and his or her family, but
also it will impact the lives of his or
her employees and their families as
well. The owner has a responsibility to safeguard the future of his or
her company for the owner's team
by implementing plans now that will
guide the agency for years to come.
So what can the agency owner do
now that will ensure that the true
value of his or her business transfers
to future owners (and compensates
the current owner fairly)? When a
business is sold, the purchase price
can be viewed as a multiplier of the
EBITDA, or net income with interest,
taxes, depreciation, and amortization. The higher the multiplier (perhaps 10 times the owner's EBITDA
number), the better the deal is for
the owner and the more money the
owner walks away with in hand. But,
the riskier the owner's business looks
to an investor, the lower the multiplier is expected to be. So the end
goal in preparing the owner's agency
for a sale is to reduce the amount of
risk within the agency to improve the
owner's chances of a higher cash out.
Business risk can be one of a number of things to potential buyers, but
one of the main concerns is often that
the agency may lean too heavily on
any one customer or employee. If
the agency owner runs the business
operations of the agency, makes the
sales, and completes the bulk of the
deliverables, would the agency continue to run if the owner decided to
leave? If a third of the agency's business is generated through a single client, would the owner continue to make
money if that client went out of business or takes his business elsewhere?
It is easy to rely too much on one particular individual or business, but fortunately, it is also an easy issue to identify
and mitigate the associated risk.

The key to setting up an agency for
success is to set the business up to survive despite the loss of any one individual. For closely held businesses, it
is often difficult for key employees to
admit that there will be a time when
they are no longer a part of the daily
operations of a business. But whether
that be due to a sudden event or a
retirement down the line, the formal
succession planning process is vital
to the agency's continued existence.
The benefit of removing risky
business practices and preparing an
agency for sale now is that, in doing
so, the owner is improving the health
of the organization and consequently
creating an organization that is both
easier to manage and easier to grow.
An agency owner may find that, in
getting a business ready for sale, he
or she may actually want to keep the
business after all. If an owner ends
up selling in the future or passing the
agency over to a successor, the owner
can rest assured that the agency will
be in good condition to move forward
without keeping the owner from a
well-deserved retirement.
●
Kevin Doyle, CPA, is a senior partner
of Lanigan, Ryan, Malcolm & Doyle,
P.C., in Gaithersburg, MD, where he
works with clients in a wide range
of industries, including commercial
construction, professional services,
wholesales, and manufacturing. He has
over 30 years' experience working with
closely held businesses, specializing
in growth, development, performance,
strategic planning, mergers and
acquisitions, and general succession

planning. He has been an expert witness in litigation support, fraud investigation, and claims analysis. He can
be reached at kdoyle@lrmd-cpa.com
or 240.848.9598.
R.A. Bobbi Hayes, CPA, CEPA, CVA is
a partner at RPC CPAs + Consultants,
LLP, in Albuquerque, NM, serving as
partner-in-charge of consulting services and co-leader of their regional
construction services niche. She
works with a wide variety of contractors, subcontractors, and professional
service firms in the heavy, highway,
building, and specialty trade construction markets. Hayes has worked
for many years with contractors in
management and execution of all
levels of attestation, tax, and consulting services and works with all
businesses on exit and succession
planning, valuation matters, and strategic planning. She can be reached at
bhayes@rpcllp.com or 505.883.2727.
Timothy T. Wilson, CPA, is national
industry partner for BKD National
Construction & Real Estate Group,
in Kansas City, MO. He has more than
30 years of experience performing
audit, accounting, tax, and management consulting services in various industries. He assists clients in
the areas of business and strategic
planning, operational and control
reviews, mergers, acquisitions and
consolidations, financial forecasts,
feasibility studies, valuations, business process improvements and audit
and tax issues. He can be reached at
twilson@bkd.com or 816.701.0208.

The Creativity, Flexibility,
and Service You Deserve
From a Surety Partner
www.granitere.com
1-800-440-5953

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Table of Contents for the Digital Edition of Surety Bond Quarterly - Fall 2017

NASBP Upcoming Meetings & Events
2017–2018 Executive Committee
From the CEO: Advice for the Advisor!
How Can Construction Contractors Expedite Payment on Federal Contracts?
The Growing Importance of the Bond Producer in the Efficient Resolution of Claims
Practical Tools to Help Jump-Start Your Company’s Cyber Plan
Bond Agency Owners: The Hardest Part is Letting Go
New Software Selection and Implementation is not a Weekend Project
Is Canada Soon to Have Its Version of the Miller Act?
2017 NASBP Resource Directory
Surety Bond Quarterly - Fall 2017 - Intro
Surety Bond Quarterly - Fall 2017 - cover1
Surety Bond Quarterly - Fall 2017 - cover2
Surety Bond Quarterly - Fall 2017 - 3
Surety Bond Quarterly - Fall 2017 - 4
Surety Bond Quarterly - Fall 2017 - 5
Surety Bond Quarterly - Fall 2017 - 6
Surety Bond Quarterly - Fall 2017 - 2017–2018 Executive Committee
Surety Bond Quarterly - Fall 2017 - 8
Surety Bond Quarterly - Fall 2017 - From the CEO: Advice for the Advisor!
Surety Bond Quarterly - Fall 2017 - How Can Construction Contractors Expedite Payment on Federal Contracts?
Surety Bond Quarterly - Fall 2017 - 11
Surety Bond Quarterly - Fall 2017 - 12
Surety Bond Quarterly - Fall 2017 - 13
Surety Bond Quarterly - Fall 2017 - The Growing Importance of the Bond Producer in the Efficient Resolution of Claims
Surety Bond Quarterly - Fall 2017 - 15
Surety Bond Quarterly - Fall 2017 - 16
Surety Bond Quarterly - Fall 2017 - 17
Surety Bond Quarterly - Fall 2017 - Practical Tools to Help Jump-Start Your Company’s Cyber Plan
Surety Bond Quarterly - Fall 2017 - 19
Surety Bond Quarterly - Fall 2017 - 20
Surety Bond Quarterly - Fall 2017 - Bond Agency Owners: The Hardest Part is Letting Go
Surety Bond Quarterly - Fall 2017 - 22
Surety Bond Quarterly - Fall 2017 - 23
Surety Bond Quarterly - Fall 2017 - 24
Surety Bond Quarterly - Fall 2017 - 25
Surety Bond Quarterly - Fall 2017 - New Software Selection and Implementation is not a Weekend Project
Surety Bond Quarterly - Fall 2017 - 27
Surety Bond Quarterly - Fall 2017 - 28
Surety Bond Quarterly - Fall 2017 - 29
Surety Bond Quarterly - Fall 2017 - Is Canada Soon to Have Its Version of the Miller Act?
Surety Bond Quarterly - Fall 2017 - 31
Surety Bond Quarterly - Fall 2017 - 32
Surety Bond Quarterly - Fall 2017 - 2017 NASBP Resource Directory
Surety Bond Quarterly - Fall 2017 - 34
Surety Bond Quarterly - Fall 2017 - 35
Surety Bond Quarterly - Fall 2017 - 36
Surety Bond Quarterly - Fall 2017 - 37
Surety Bond Quarterly - Fall 2017 - 38
Surety Bond Quarterly - Fall 2017 - 39
Surety Bond Quarterly - Fall 2017 - 40
Surety Bond Quarterly - Fall 2017 - 41
Surety Bond Quarterly - Fall 2017 - 42
Surety Bond Quarterly - Fall 2017 - 43
Surety Bond Quarterly - Fall 2017 - 44
Surety Bond Quarterly - Fall 2017 - 45
Surety Bond Quarterly - Fall 2017 - 46
Surety Bond Quarterly - Fall 2017 - cover3
Surety Bond Quarterly - Fall 2017 - cover4
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