|From the Editor
Recently, I counted the number of for-sale signs on houses in my neighborhood. On a loop through the neighborhood, I counted nine Realtor signs. Astonishingly, five were marked sold. I think this is a very good sign for the growing strength of the economy. This same phenomenon also seems to be affecting the mergers & acquisitions marketplace. BizBuySell has just reported that small business transactions are continuing to rise and are up more than 61% from the same time last year.
This is shaping up as a good year in green industry mergers & acquisitions as well. In many industry sectors, the level of activity is as high right now as we have seen it in recent years for both buyers and sellers. This does not’t mean that making a deal and getting it financed is easy, but there is considerable energy in the marketplace.
We are very excited to announce that our new program, Green Exit University, is now open and accepting students. On-line classes begin at the convenience of students. The purpose of Green Exit University is to enable green industry business owners to develop their own exit plans. The cost is very reasonable and we hope you will consider participating.
As always, if you are considering selling or buying a green industry business or you are ready to begin developing your exit plan, we welcome the opportunity to discuss your situation confidentially. Justst give us a call or send us an email.
|Sorting Out Obamacare and the Small Business Mergers & Acquisitions Market
Some Thoughts for Green Industry Business Owners
Like many small business owners, I am thinking about the implementation of the Affordable Care Act (“Obamacare”), even with the recently announced one-year delay in the employer mandate. I really don’t like that term Obamacare, because it seems a bit disrespectful to our President. I am reminded that one of my favorite presidents, Jed Bartlet, said, “In this White House, when the President stands, nobody sits.” I fully understand why many, if not most, small business owners are very concerned about the impact the Act’s implementation may have on their businesses. I am also cautious about complaining, because as a 57-year old, self-employed person, I am someone who has already benefited from its provisions. I know that people in my category are one job change away from disaster when it comes to health insurance.
I recently read an interesting article in the New York Times that discussed why many business owners are thinking very hard about embracing the $2,000 penalty per employee (in excess of 30) for not offering health insurance. Here’s the link. If you have 100 employees, the penalty might be something like (100 minus 30) times $2,000 or $140,000. While that may be more palatable than 100 times at least $5,000 or about $500,000 (or much more), even the lower number would be enough to wipe out many, if not most, of my clients. Many of my lawn and landscape clients have primarily low income employees and the premiums or penalties would raise their costs astronomically. It is not difficult to understand why many small business owners are extremely disturbed and frightened by the employer mandate.
These lawn and landscape employers would, I suspect, often be better off offering a minimal qualifying (adequate) plan with the maximum cost-sharing of 9.5% of the employee’s income. I am confident that relatively few field employees would take that deal, leaving the employer to cover those employees willing to take the deal, but paying no penalties. 9.5% of income for a $10 per hour employee would be around $150 per month. I don’t know many of those guys with $150 extra every month. In many ways, that is not a pretty strategy, but I think it will work for most employers of relatively low-income workers.
It is hard to predict how this is going to affect the small business merger & acquisition marketplace, particularly in the green industry. With valuations being primarily driven by cash flow, it seems impossible for it not to have an impact. We are already seeing situations in which small employers who do offer health insurance are being, at least theoretically, penalized in terms of valuation. I can’t really decide if that makes sense or not.
The one-year delay in the employer mandate does not’t put this topic so far in the future that we don’t have to worry about it now.
|Green Exit University is Open:
Improve Your Odds for a Greener Exit-
Develop Your Own Exit Plan
We are pleased to announce that Green Exit University is now open and accepting participants. On-line classes are available now and can begin at the convenience of students.
If you have been thinking about exit planning, but don’t know where to start or have been worried about the cost of bringing in professionals to assist you in the process, Green Exit University may be just the answer for you.
Surveys show that nearly all Green Industry business owners have objectives for what they would like to do after they retire and/or sell their businesses. However, less than 40% have an exit strategy and that less than 15% have an exit plan. Experience tells us that those without a strategy and a plan are unlikely to achieve their objectives of being able to exit their business on their timetable and to enter the next phase of their lives financially stable. Improving those odds is what exit planning is all about and Green Exit University is a new, cost-effective approach to developing an exit plan for your business. Green Exit University includes twelve modules of training, each including two or more videos, reading, exercises based on your business and quizzes to measure your progress. At the conclusion of the course, you will have developed an exit plan for your business.
There are three levels of participation in Green Exit University:
All three versions are economical. Choose the one that meets your needs. For a comparison of the Green Exit University Options, visit greenexituniversity.com/cost-structure/
Here’s a link to a video “Sneak Preview” of Green Exit University content.
Building a Sellable Business with John Warrillow
John Warrillow will lead a one-hour presentation on building a sellable business. Warrillow’s book Built to Sell was ranked by both Inc. and Fortune Magazine as one of the best business books of 2011. During this unique session, John will discuss the principles of increasing the value of your company and address audience questions. The Webinar will take place on Wednesday, July 31 at 8 am PDT / 9 am MDT / 10 am CDT /11 a. m. EDT. To register, click here or use this link: https://www4.gotomeeting.com/register/293079271
Registration for this event is limited and by invitation only, so please be sure to identify yourself as a guest of Ron Edmonds or The Principium Group.
|Do You Know Your Sellability Score?
Want to Find Out if You Have a Sellable Business?