Cissel cites three main challenges that he sees business owners face when they look to transition or sell their business .
Paul Cissel has been part of over 52 mergers and acquisitions over the course of his career . With 42 years of experience in the IT industry , and 23 of those as a serial entrepreneur , Cissel ’ s mission is to help MSPs large and small uncover and understand new ways to add value to their business .
Cissel cites three main challenges that he sees business owners face when they look to transition or sell their business .
And by value-added , he ’ s not talking about some mythical sales projection number or reshuffling KPIs . Cissel ’ s experience-driven passion is helping businesses increase their enterprise value , which is a direct reflection of the price for which they can be acquired or directly sold . For example , most MSP owners don ’ t understand what actions create top performance and , hence , significantly undervalue their business . Let ’ s say your business is worth $ 2 million . Cissel is here to help you understand and implement processes that make the same business worth $ 5 million .
And if you ’ re building an exit strategy or preparing your company for a merger or acquisition , those numbers are extremely important — especially to the baby boomer generation .
According to the Exit Planning Institute , 65 % -70 % of MSP owners are baby boomers , and as such , they are set to retire within the next 10 years . This represents a huge market shake-up and means that over the next 10 years , 4.5 million businesses and over $ 10 trillion will exit or transition within the marketplace .
“ So , do you have a transition plan ?” Cissel asks . “ Do you have a three- or a five-year plan ? Do you have an exit strategy ? What I ’ ve found is that most people don ’ t .”
Cissel cites three main challenges that he sees business owners face when they look to transition or sell their business .
The first challenge is simply what Cissel calls “ overall uncertainty and readiness .” This is simply the natural human tendency to avoid change , put things off and delay thinking about the future .
“ A lot of people at this stage are asking , ‘ What ’ s next ?’” Cissel says . “ And they ’ re really not sure .”
Challenge number two is what Cissel calls the “ five Ds ,” and many if not all of the Ds particularly affect the baby boomer generation at this stage of life . They are death , disability , divorce , distress and disagreement . Any combination of these five can impact the decision of a business owner to sell and how they are able to go about it , Cissel notes .
Finally — the money . Challenge number three is what Cissel calls the “ income vs . value conundrum ,” and it is the misstep that he sees the majority of small business owners make that causes them to leave significant amounts of cash on the table . And why ? Because “ they are focused on current income and not enterprise value ,” Cissel says .
So , what ’ s the solution ? In a word , readiness .
“ As owners and leaders , it is our responsibility to our families , employees , customers and communities to make sure our companies can survive and thrive , even without us ,” Cissel notes .
Paul Cissel , Expert In Residence - Mergers And Acquisitions , TMT
In this Mergers And Acquisitions series , we ’ ll continue to explore the world of M & A with Paul Cissel , from current happenings to understanding where your company stands , how it is valued and how to make sure that you are equipped to maximize your business ’ s true worth .
Want to learn more about how some titans of the industry used M & A to secure their futures ? In order to be considered a titan , these MSPs must have at least $ 10 Million in revenue . Scan the QR Code and learn from some of the best in the business ! MSPSuccess . com / titans