Converting Inspiration & Execution as an Entrepreneur into Cash

Nov 15, 2018

Tom Jago passed away at the age of 93 in October 2018 in London, England.  If the name does not resonate with you, you are likely not alone.  However, it is my suspicion that you are familiar with the product Mr. Jago created in 1973, Baileys Irish Cream.  Today, Baileys Irish Cream is the top selling liqueur in the world.  It is common for product name recognition to significantly exceed name recognition for the individual who had the inspiration to create the product and the execution skill to bring it to market.  IBA, the oldest business brokerage firm in the Pacific Northwest, frequently represents first generation entrepreneurs in the sale of their businesses.

1st generation business owners contact IBA to sell their businesses for two primary reasons.  The first and most common reason, which can occur after five or fifty years of business ownership, is to convert their business asset into cash in a liquidity event. The advantage of owning a business and pursuing a career as an entrepreneur over selecting the more common path of employment to someone else is that at the end of your tenure as a business owner of a privately held company or family business, if you have been successful, you can sell the business and receive compensation for your efforts above and beyond the annuity of salary & dividends you received while you owned the business. The highest paid employee at the most profitable publicly traded company cannot sell their position to the highest bidder.  Their compensation is limited to the value placed on their service during the tenure of their employment.

The second most common reason for company founders to sell their businesses is because they enjoy creation more than management.  An invigorating mental & emotional work environment is created when an idea is being transformed into a business model.  The environment often includes long hours of collaboration & effort by like-minded people passionately attempting to execute a common vision with ideas being employed and rejected through a dynamic trial & error process at a rapid pace.  Business is the ultimate competitive sport and for individuals with the entrepreneurial gene this “game” environment is often the most challenging, rewarding, and adrenaline rush creating that can be experienced professionally.  However, this environment, if execution of the business vision is successful, can evolve into one with less attractive business management characteristics ranging from accountability to investors & financial institutions to personnel management (The most common frustration point for entrepreneurs because finding employees that mirror the owner’s passion & work ethic can be problematic, especially as the company grows in size). This evolution from start-up with a small group of dedicated people working in unison to mature company with marketing, operations, and financial accounting & human resource staffs often creates a work environment for the owner that is less attractive and commonly more stressful for the owner than the one that existed in the company’s early years.  An economically viable solution to diminishing occupational enjoyment for an entrepreneur at this stage is to sell their business and transition the helm of the business in an equity liquidation event to an individual better suited experientially and by skill set for the needs of the company.  IBA represents entrepreneurs wishing to successfully exit from business ownership at this stage on a regular basis, frequently achieving premium values for their companies through professionally & persuasively conveying the existing strengths and potential of the business model.

Once this dynamic professional environment has been experienced by an entrepreneur, a desire to recreate it often is pursued when the next “big” idea is generated.  In the case of Tom Jago, he recreated the environment later in the life by being involved in the creation of Malibu flavored rums.  Personally, as a mergers & acquisitions intermediary, I have helped one technology entrepreneur sell four businesses over the last 20 years.  I recently shared lunch with him and learned about his current project (A cell phone application with significant, international, B2B potential). He has started to plan for the sale of that business collaboratively with me in the next three years. IBA professionals welcome conversations with entrepreneurs about the process involved with selling a privately held company or family business whether a sale is desired in 2019 or 2022.  We value being a trusted, collaborative resource to the small business community.  All information provided to IBA is held in strict confidence.  100% of IBA’s fees are payable upon completion of a project.  We do not charge as a firm for short or long horizon strategic planning with a potential client.

If you are a first generation owner of a business in the Pacific Northwest who is thinking about selling your privately held company either because you wish to retire and convert you business asset into cash or enjoy creation more than management as an entrepreneur, we at IBA would welcome the opportunity to learn about your business & exit strategy goals and provide an overview of the services we offer our clients.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.