Maybe You Don’t Need an Exit
Some owners are finding that their business is worth more to them than it would be to a buyer.
Good Morning!
Here are today’s highlights:
Influencer marketing worked because it didn’t feel like advertising. But that may be changing.
There are steps you can take to avoid getting ghosted by a job candidate.
The hot new thing in franchising is a Yemeni coffeehouse, and even guys named Cody are buying in.
An economist with Apollo Global Management thinks President Trump may be proven right about tariffs.
THE 21 HATS PODCAST
Why Don’t You Just Sell the Business? This week, David Barnett, Mel Gravely, and Kate Morgan discuss a somewhat unusual approach to succession, which is to not sell the business. Basically, it’s about taking a step back from leadership while maintaining ownership, and both Kate and especially Mel are moving in this direction. The approach can pay off financially in part because businesses often are worth more to the owner than they would be to a buyer. Why is that? As David explains, the business that the buyer buys isn’t really the same business that the owner sells: “If you've owned the business for a long time,” he says, “the balance sheet is probably pretty strong. You've had time to earn money, pay down debts. You’ve got a good equity position. This makes the business strong, and it makes it better able to weather storms.”
But, as David explains, if he were to buy Mel’s business, he would probably have to borrow money to finance the acquisition. That would leave him with a much weaker balance sheet than Mel has today. And a significant portion of the cash flow that Mel currently generates would have to go to the bank. Which is part of the reason Mel’s keeping his business. Of course, this approach to succession does present some challenges, including the need to find someone to run the business.
Plus: We also discuss whether it’s possible to sell a solopreneur business.
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