Is it Time to Sell Your Business?

Have you been entertaining thoughts of selling your business? Many business owners keep that thought in the back of their head. But if you don’t need the money, why should you sell?

Possible reasons include that you’ve gotten a good offer, you’re ready to retire, you are tired of the risk or you feel it’s time for a change. Or, if you have a family business, there may not be a family member interested in taking over. Whatever the reason you have to explore the option of selling, you’ll want to enlist the right team to value your company correctly and help you make the right decision to get the best price.

Maybe the concept to start your business was entirely your own. But you didn’t build a successful business by yourself — you had a team that most likely included lawyers, CPAs, investors, salespeople and your employees. When it’s time to sell, don’t try to do it alone. It’s time to build another team — one that will ensure you get the outcome you desire.

You would definitely want to include your lawyer, accountant, and an expert on the tax ramifications of the sale. Also consider adding a business consultant, even if you’ve never used one before.

Acquisitions is one of our areas of expertise at GlassRatner. We guide our clients through a process that begins with valuing the company, preparing and presenting the company to the marketplace, weighing offers from potential purchasers while balancing the objectives of stakeholders, and closing with the best possible purchase for that client.

We also work with distressed companies that may have filed or need to file for bankruptcy and need a quick sale.

Whatever your reason for selling, make sure to build the right team for the best possible outcome. It took a team to get where you are, and it will take another one to create a lucrative exit.

For more information on selling a business, please see “5 Mistakes to Avoid When Selling a Business.”

We Are Not Family in the Workplace

You hear it all the time – “I love my job. We’re like family there.” It’s true that a workplace setting may sometimes resemble a family. You spend a lot of time together. You have parties together, go out to lunch, celebrate successes. Sometimes people in the office even get nicknames like Aunt Betty.

But there are big differences between a family and a business. Here are just two: a business has the goal of making a profit. And it can choose who gets to stay and who goes. With family members, for better or worse, you’re just stuck with them.

This family mentality, while it may sound inviting to outsiders and help with employees’ morale, is actually not what you want to encourage in a workplace. Yes, you can keep your parties and celebrations and encourage good relations and positive morale among co-workers. But the overall goal is to build a high-productivity team – not a happy family.

Let’s take a look at Netflix.

Netflix has 81 million subscribers and grew its revenue from $1.2 billion in 2007 to $6.8 billion. This pioneering company has changed the entertainment industry. Its history, place in our society and future is fascinating. You can read all about it in the New York Times Magazine article this past weekend, “Can Netflix Survive in the New World It Created?”

But there was a point early on when the company’s survival was in question. In 2001, after the internet bubble burst, Netflix had to lay off 50 of its 150 employees, cutting its staff by one-third. And what happened? The people who were left had to work harder, but were actually happier.

Founder and CEO Reed Hastings and former head of HR Patti McCord thought it was because they “held onto the self-motivated employees who assumed responsibility naturally.” They said office politics disappeared overnight.

Since then the company strives to maintain what Hastings calls its “high performance” culture. A lot of companies pay lip service to that value, but at Netflix, they mean it.

Netflix captured its culture in a slideshow the company produced in 2004. (And that has been viewed 14.5 million times.) This 124-slide, simply produced show includes the company’s philosophy of hiring, And firing.

“Like every company we try to hire well.”

“Unlike many companies, we practice: adequate performance gets a generous severance package.”

“We’re a team, not a family. We’re like a pro sports team, not a kids’ recreational team. Netflix leaders hire, develop and cut smartly, so we have stars in every position.”

The analogy of the kids’ recreational team versus the pro sports team is perfect to capture the mentality I’ve seen so often in my practice with GlassRatner. I mention a few stories in my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”

There was the company where the CEO’s grandmother was on the payroll, but whose primary responsibility seemed to knit the CEO socks. There was the beloved “Aunt” Tess who handled payroll, helping herself to the salaries of several non-existent employees every two weeks.

I’ve seen many companies that run more like a kids’ recreational team. Everyone gets a trophy and we love the ladies who brings the snacks!

But in real life, people who don’t perform get cut from the team. And the job of CEOs and senior management is to field the best team possible. Netflix does that early on by recognizing mediocre talent and paying them to get off the team.

Zappos has a similar philosophy for cutting people quickly who aren’t going to be the best team members. They famously use “The Offer,” giving new employees the opportunity to receive $2,000 to leave rather than starting the job.

Last year, Zappos had a large increase in turnover when 18 percent of the company took buyouts, an extension of “The Offer.” Zappos was unfazed, according to this article in The Atlantic, “Why Are So Many Zappos Employees Leaving?”

“We have always felt like however many people took the offer was the right amount of people to take the offer, because what we really want is a group of Zapponians who are aligned, committed, and excited to push forward the purpose and vision of Zappos.”

That’s the kind of team you want to build. A pro sports team. Team members who don’t perform can and will be cut.

When Bankruptcy is Not the Answer

When a well-known media company previously worth roughly $250 to $300 million files bankruptcy, it makes news. Add in an outed revenge-seeking billionaire financing a lawsuit against the company brought by a pro wrestler/reality TV star over a published tape c of him enjoying some hanky-panky with his friend’s wife, well, now you’ve really got a thriller.

Gawker Media, an online media company and blog network owned by Nick Denton, filed for bankruptcy last Friday. The filing came after the company lost a $140 million lawsuit brought by the flamboyant former pro wrestler Hulk Hogan over excerpts of a tape of him and his friend’s wife Gawker posted on its site.

Peter Thiel, who made his fortune with PayPal and Facebook, funded the lawsuit, calling it one of his most philanthropic efforts, as well as many others in what is seen as an act of revenge over many Gawker posts about him, including one in 2007 with the headline “Peter Thiel is totally gay, people.”

In this instance, filing bankruptcy may have been the only option for Gawker, as insurance doesn’t cover the $140 million judgment, and the company wanted to protect its assets from seizure.

Odds are really good you won’t find yourself in this situation. But you may be considering filing bankruptcy. That is one option I discuss with clients when their companies are in dire straits.

However, there are several other avenues to explore first and many reasons not to take this step, as outlined in my post The Downsides of Bankruptcy. These include the expense, the damage to your company’s reputation and the loss of control.

While bankruptcy is one tool used to protect assets, it’s not the only one and requires careful consideration of the alternatives. At GlassRatner, we look beyond the obvious choices and consider the optimum strategies to help you and your business.




The 1 Question a Family Business Owner Should Ask His Children

Succession planning is critical for any business to survive beyond the current generation, and especially so when it comes to family businesses. Yet according to a PwC US Family Business Survey, 73 percent of family business owners in the US admit they don’t have a documented succession plan in place.

That’s one reason why only around 12 percent of businesses survive into the third generation. In Canada, business founders have only a 3 percent chance their business will survive and their grandchildren will run it, according to the article “Succession Planning in Family Business – Freud and Finance.”

While family business owners may assume their business will pass along to their heirs and thrive under the new owners’ stewardship, they have not taken the necessary steps to ensure a successful transfer of ownership.

If you own a family business and don’t have a plan in place, the time to start is now. As you consider what steps to take, ask your children this one question first, as suggested in the article above: Do they love the business enough to risk their own capital to buy it, over time?

If they don’t share your passion for the business and love it enough to invest their own money, as you did, they may not be the best people to manage it for growth in the future.

For more steps on passing your business to your children, please read “Should You Give Your Kids Your Business? 2 Factors to Consider.”

Qualities of Millennials and How to Work with Them, Part 1

This is the first of a two-part series on working with millennials. This first part introduces three qualities of millennials in the workplace. Part two will examine how to deal with these qualities and use them to contribute to the success of your company.

 As Principal of GlassRatner in our restructuring and bankruptcy practice, I know that to be successful, a “turnaround” must include many facets. These include financial re-engineering, legal and contractual issues, vendor and customer relations and extensive operational adjustments.

A critical part of the operational piece is not how the “widget” is made or distributed, but whether you have a motivated, dedicated workforce to accomplish the corporate goals. Most company’s workforce is multi-generational and the millennial component is becoming more and more important to one’s success.

Millennials have officially taken over as the group with the largest demographic in our country. Numbering 75.4 million, they recently overtook baby boomers, according to a recent survey released by Pew Research Center. Last year, this generation also took over the majority of the U.S. workforce.

So odds are great that you work in an office with millennials. And if you don’t you still come in contact with them every day in the business world. This generation has some qualities that are different than previous generations — in their work habits, outlook on life and even what motivates them.

So Baby Boomers and Gen X can all lament about it, joke about it and get frustrated about it. Or they can try to understand the qualities millennials bring to our businesses and use them to our advantage.

Megan Abbott is a millennial life coach — yes, there is such a thing — and founder of Fruition Personal Coaching. In an article in Forbes, “Study: Millennials’ Work Ethic Is In The Eye Of The Beholder,” she said,  “Older employers can disapprove and judge millennial values as inferior to their own … or they can accept and strive to understand what drives this new generation.”

As a first step to understanding, here are three qualities that have been identified as defining the millennial generation.

  1. They are tech savvy.

Millennials are the most connected generation in history, and have been referred to as digital natives. They grew up with technology at their fingertips and never took a photo on film, listened to something on a tape and have probably never sullied their fingertips with ink rubbed off a newspaper.

People in older generations are what is referred to as digital immigrants. Generally, they have had to migrate over to each massive shift in technology, adapting to a new way of doing things.

  1. They are not as motivated by money.

You’ve got some employees doing a great job and seemingly happy doing so. Then one day they just quit, possibly with no other job or one at a lot lower salary. It’s happened in companies that I’ve re-engineered and has probably happened to you. What’s that about?

While millennials are definitely motivated, it isn’t always about making money.

They want a good quality of life and want to change the world for the better. While baby boomers seek money, an impressive title and recognition, millennials want to know how their work fits into the bigger picture.

  1. They are used to working in teams and are creative in finding solutions.

Education styles change. While many previous generations primarily learned on their own, millennials were educated in a more collaborative method. They are more comfortable working in teams and also place a high value finding creative solutions to problems.

Do these qualities sound familiar? In the next blog, I’ll discuss how to leverage these qualities to contribute to the success of your company.

Joining the Team at GlassRatner

I’ve been chuckling to myself about the rumors of my retirement that I discussed in a previous column, “No Desire to Retire.” I wanted to let you know that I’m embarking on an exciting new opportunity.

I’ll be joining the well-respected team at GlassRatner Advisory and Capital Group LLC as a principal effective July 1. GlassRatner is a nationally known financial advisory services firm. I was attracted to the integrity of the GlassRatner team members, its national platform and reputation, and the work the firm has done in providing solutions to complex business problems.

They seem to be excited to work with me, too. And they love “How Not to Hire a Guy Like Me,”which of course, is an effective way to win my loyalty.

It’s funny; this opportunity just presented itself a few weeks ago and we’re off to the races already. In my work as a turnaround authority, I’ve learned to recognize good opportunities for growth and success when I see them. I am excited and honored to be joining GlassRatner and believe we will both benefit from the partnership.

Another aspect of GlassRatner I found attractive is its reputation as a collegial firm and the way they function as a team. Look for some of those team members to be guest contributors to my blog. I’m sure you’ll enjoy getting to know them as much as I will.