Feb 7, 2022
From Private Equity to The Exit Strategy Playbook w/ Adam Coffey
- BRT S03 EP06 (105) 2-6-2022
Things We Learned This Week
- Adam Coffey past experience in Private Equity (PE) puts him in a unique position to consult on buying, selling and running business from Purchase to Exit
- Buyer Types – Strategic and Financial - Light On / Lights Off, what to do with the old business that was bought
- Prepping the Business for Sale – takes 3 years, organization setup, due diligence prep, financial info
- Advisory Team – importance of building a good and experienced team of advisors (CPA, legal, investment banker, consultants), the wrong team could you lots of $
- Sales Process – Mgmt Meetings, due diligence, LOI, NDAs, and more due diligence
Guest: Adam Coffey, author of The Private Equity & Exit Strategy Playbook
LKIN: https://www.linkedin.com/in/adamecoffey
Website: https://adamecoffey.com/
Adam Coffey - CEO, board
member, best-selling author, Forbes Business Council
member, and an acclaimed guest speaker, Adam Coffey, is an
inspiring and authentic leader who creates high-performance
cultures and drives transformative growth.
Over the past 21 years, he has had
the honor of serving as President and CEO of three national private
equity-backed service companies, each in different industries. Two
of the three companies he built achieved enterprise values of $1B.
Throughout his career, Coffey has a proven track record of
achieving notable outcomes for stakeholders. His career average at
exit is 5x MOIC (Multiple of Invested Capital).
Coffey is an active mentor to MBA
candidates and is a regular, favorite guest speaker at UCLA.
Coffey, who considers himself a blue-collar CEO, has a diverse
background. He has led several commercial and industrial service
businesses, is a licensed general contractor, a pilot, a former GE
executive, an alumnus of the UCLA Anderson Executive Program, and a
veteran of the US Army.
Coffey’s first book, The
Private Equity Playbook, was released in February
2019 and became an instant #1 Amazon Best Seller and
private equity cult classic. His second book, The Exit
Strategy Playbook was released in September of 2021 and
also was a #1 Amazon Best Seller. He was named one of the “Most
Influential Leaders” by the Orange County Business Journal in 2018,
2019 and in 2020 and 2021 was named to their prestigious "OC Top
50". Coffey makes his home in Westlake, TX with his wife and young
daughter.
Exit Strategy Playbook Notes:
Part One: The Universe of
Buyers and Exit Strategies
Analogy is “Lights On or
Lights Off?” describing types of buyers like strategic buyers,
financial buyers and alternative selling approaches. Some strategic
buyers want the business for the tech, talent or intellectual IP.
Some buyers want the customers, or geography of the business. Some
Strategic buyers may take the talent and IP, and then close the
business down over time (lights off), meaning they do not need
redundancy like managers or HR, etc. A financial buyer does not
work in this industry or have a tem. They would buy the whole
business and look to keep the owner, management and tem together to
keep running the business (lights on).
Part Two: Prepping Your
Business For Sale
You have to prep your business for a
sale, think 3 years ahead. You must present your company to various
possible buyer groups and be organized. The importance of financial
reporting, also includes; outsourcing; legal; serving up EBITDA;
cash vs accrual GAAP; how to handle real estate holdings;
operations; successor planning; and growth projections.
Part Three: Build Your
Advisory Team
Coffey talks about the fact you need
strong and experienced advisors in the sale process to prep for
the qualified buyer. He means tax advisors and accountants;
lawyers; and a broker like an investment bankers/transaction
advisor. He reviews costs, timelines and where each assists a
seller. If you do not have a good team, the buyer could take
advantage of you (especially if they are experienced), and the
costs could be hundreds of thousands to millions $.
Part Four: The Sales
Process
How the process actually works from management
meetings to the transfer of the business post sale. Selling a
business is like a second job, you still run your company and need
to maintain profits while meeting with buyers and advisors. There
are different type of buyers and you need to determine the real
buyer interest. You ramp up the process with the hot buyers and
cool the process with lesser buyers. A good investment banker can
manage the process. There are NDAs, LOI (letter of intent),
disclosure of financial info, more due diligence, surprises,
initial meetings, then detailed meetings. Thru the whole process
the seller must be on his A Game.
Clip from Adam Coffey 8/2020 Guest Appearance on Private Equity:
https://brt-show.libsyn.com/brt-ep-30-8-30-20-the-private-equity-playbook
Peak behind the curtain of Private Equity, and learn how companies are bought, managed, financed, plus what metrics (EBITDA) are used for valuation. Unique perspective from someone who has run companies for PE Firms for the last 20 years. Learn the secrets, and why Execs at companies should consider working or selling to a PE Firm.
Private Equity Topic: https://brt-show.libsyn.com/category/Private+Equity-Valuation-MandA-Franchise-Business+Broker
Investing Topic: https://brt-show.libsyn.com/category/Investing-Stocks-Bonds-Retirement
More 'Best of Investing': Here
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