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2019 Award Winners

2019 Award Winners

2019 Rookie of the Year

Bob McAdams
Central Ohio Area President

2019 Rising Star

Peter Geise
NE Ohio Area President

FocusCFO Hall of Fame

Fred
Dannhauser

NW Ohio
Area President

Kathleen
Ferry

NE Ohio Area
CFO

Peter
Geise

NE Ohio
Area President

Jim
Rowlands

Central Ohio
CFO

Client for Life Award

David
Bourke

Central Ohio
CFO

Don
Cain

Central Ohio
CFO

Dean
Cole

Central Ohio
CFO

Will
Cooper

Central Ohio
CFO

Kathleen
Ferry

NE Ohio Area
CFO

Sherif
Matar

Central Ohio
CFO

Jim
McKinney

Central Ohio
CFO

Jim
Rowlands

Central Ohio
CFO

CFO Lead Generator

Jim
Zins

Central Ohio
CFO

Scott
Lee

Central Ohio
CFO

Ed
Chong

Central Ohio
CFO

Joe
Hardiman

SE Ohio
CFO

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Ted McQuade

Welcome Ted McQuade

Welcome to the FocusCFO Team!

Ted has led manufacturing and distribution companies for over 20 years, usually in a turnaround situation. He is a successful change agent, with a track record of positive results in companies through team building, mutual accountability, and Lean Six Sigma. He has acquired, integrated, and sold many companies.

Prior to FocusCFO

He worked for GE for 15 years in various businesses, first in Finance and then in operations. He joined The Standard Products Company in 1995 as Executive Vice President, North American Automotive Operations, where he successfully turned around an engineered component business. When Cooper Tire & Rubber acquired Standard Products in 1999, Ted moved to the Plastics Division as its President and oversaw its divestiture.

Recently, Ted has served as President & CEO for several smaller companies within the automotive, appliance supply chain and metals industries and has served as a board member of three independent companies.

Ted received both his undergraduate degree (in English Literature) and his MBA (Finance) from Indiana University.

Other Interests

He is a member of the American Cancer Society’s Northern Ohio Board, and has been involved with its annual golf event at Canterbury since 2011, co-chairing it from 2016-18. Ted is passionate about gardening at his home in Chagrin Falls, supporting his wife in her real estate career, taking care of their four dogs, and improving his golf game.

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The Personal Aspects of Exit Planning for Business Owners

The Personal Aspects of Exit Planning for Business Owners

By Tom Flynn

Small business owners typically eat, sleep, and breathe their business. It is their passion, and it is consuming. Thinking about the day that will come when they will exit the business in some way is generally back of mind, and they don’t consider planning for that process. While there are many facets to the exit planning process, this article will focus on the personal readiness of the owner to exit, including planning what their lives will look like after they are no longer involved or fully involved in managing the business.

First, a business owner who has dedicated their lives to building something of value must be emotionally ready to let go. Are they, in fact, ready? They are relinquishing control of their life’s work. Becauseentrepreneurs spend their lives managing the highs and lows of everyday business, they are left with an emotional void, stemming from a lack of purpose or just, simply, things to do. Planning the logistics of the exit will create, for the owner, a picture of what their new life will look like. It will help them to mentally prepare for this picture.

Second, they must have a personal financial plan for life after exit. This will be based on their current personal assets, what lump sum they receive for the business when they exit, and any residual income they may earn from the business. Based on these factors, the financial plan must address:

●  Will they be able to receive adequate income from sources such as dividends or interest from the investment of their assets, residual income from the business (if any), and retirement benefits? Will the income enable them to maintain the lifestyle they desire? Will this income be sustainable for their lifetime?
●  Will they have funds to do the things they want to do during retirement such as travel, buy a new car, help family members, etc.?
●  Will they have funds for their own long-term care?
●  Will they be able to maintain funds that they wish to pass on to their heirs?

The plan will involve determining how to invest their assets, what insurance they may need such as long- term care and life insurance, and how they will receive income distributions from various sources.

Third, they will need to consider how they will spend their time during retirement. As mentioned before, they will be left with a void in their lives. Their time has been consumed for years by managing the business. They need to consider what they will do on a day to day basis. For some, this may not be a problem. They may have a hobby or travels that they have always wanted to pursue, or want to spend more time with family. But not every business owner has considered how they will spend their time. Completing their business exit and suddenly having time on their hands that they don’t know what to do with could take an emotional toll. This is why planning “life after exit” is a critical part of the overall exitplanning process.

In later articles, I will address the nuts and bolts of exit planning decisions and strategy, but the personal planning aspect is something I felt was critical to address.

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Business Exit Strategy – Maximizing Value

Business Exit Strategy – Maximizing Value

By Tom Flynn

Every business owner will, at a point in time, exit their business in some way. Most, however, don’t think about how they will exit until they are almost ready. I have found that most business owners are so engrossed in running their business that they don’t think about selling until six months before they want to exit. Unfortunately, this is a poor strategy. Effective exit planning takes time.

A survey was conducted by the Exit Planning Institute, in partnership with Grant Thorton, PNC, and theOhio Employee Ownership Center at Kent State University. This “State of Owner Readiness“ survey found that 75% of owners who sold their businesses had “seller’s remorse” because they felt as though 1) they did not receive a fair monetary value and 2) were not prepared for the emotional impact ofselling their business. Seller’s remorse can be rectified by beginning to plan for the exit transition three to five years before an owner wants to exit.  

The typical exit plan will determine an “Attractiveness Score” and a “Readiness Score”. These scoresreveal the areas of improvement needed for a successful transition. The attractiveness score indicates what is needed to make the business attractive to a buyer. The readiness score addresses the questions:

  1.  Is the business at its ultimate value?
  2.  Is the owner ready to sell?
  3.  Does the owner have an adequate financial plan?

The goal is to utilize information from the attractiveness and readiness scores to determine what actions need to be taken to build the company to its maximum value over three to five years, no matter whtype of exit the owner will choose. An added benefit of this process is normally an increase in profits and cash flow during the growth period because of the actions taken.
 

This focus of this article in on building the business value. How, specifically, to do this varies from business to business based on many factors, but the end goal is the same to create an entity that will provide maximum value to the new owner or owners, and therefore create the maximum exit return for the current owner.

First, of course, creating maximum value involves increasing revenue and the bottom line. Achieving these goals may involve increasing sales and marketing efforts utilizing techniques that provide the maximum ROI. Other initiatives may involve expanding into new markets or diversifying the company’sproduct or service offerings. Any of these actions or other growth initiatives will require capital, so before beginning any growth efforts, it must be determined where this capital will come from. These are a few options:

  1.  Current assets Is there cash on hand or are there other liquid assets available? How much is available? What are the risks vs. returns of using these assets?
  2.  Cash flow Is cash flow being maximized by the effective management of accounts receivable, payables, and inventory? More cash on hand can be used to fund growth.
  3.  Capital raising Is there a potential to raise debt or equity financing? This is a complicated issueexit implications of capital raising must be carefully considered. It can have a serious impact on the market attractiveness of the business if not managed correctly.

Second, growth much be managed. Increasing revenue will require an increased ability to fulfill orders, additional customer service, and other potential expenses.

Third, the company needs to have a sustainable competitive advantage, and that advantage should be strengthened as much as possible.

Fourth, making the business attractive to the market will require a stable and experienced staff who will be likely to stay after a change in management.

Finally, the business’s reliance on the owner must be considered. If the expertise or customer relationships of the owner are keys to the business, there must be a plan in place to transition these to another key manager or to the new owner.

The value growth initiatives we have discussed are not all inclusive and must be part of a comprehensive plan, the formation of which requires the skills of an experienced professional. This plan, again, must be created and initiated at least three to five years before the expected time of exit.

 

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Exit Options for Business Owners

Exit Options for Business Owners

By Tom Flynn

As a small business owner, your goal from the beginning was to build value, but at some point you will exit the business. If you have executed an exit strategy plan over three to five years, as discussed in my previous articles, and created maximum value, you have options.

  • Continue to grow your business and pay yourself a healthy income.

  • Hire someone to run the business for you while you benefit from the profits.

  • Transition the business to your family or other management.

  • Sell the business.

Let’s discuss the sale options in more specific terms.

**Note that tax implications must always be considered when choosing an option.

You may choose to put your business on the market to sell if for a fair market value.

Here are some things to consider when determining if this is the right option for you:

  • Will you be able to get the price you need in the time frame you have in mind?
  • How difficult will it be to find a buyer?
  • How much do market factors impact your business, and what is projected to happen in your industry and the market in your desired sale time frame?
  • What are your goals for the terms of the sale? Is this realistic? 

Your business may be in a position to be acquired by another company that has a similar product or service, or a similar customer base. That company may want to acquire you for a variety of reasons your company assets, access to your customers, intellectual property, or to remove you as a competitor.  

Here are some things to consider: 
 

  • What companies are potential acquirers (if there are any)?
  • What is your value to an acquirer compared to your value to a buyer in the open market? Itcould be more or less, based on the why the other company wishes to acquire you. In some cases, the value may be much greater if the company is acquiring you for strategic reasons.
  • Will you be required to stay with the company for a transition period? This is often the case. Doyou want to do this? What are the risks to you if the acquisition/merger does not go well? You should make sure that the terms of acquisition include adequate protections for you.

    You may set up an Employee Stock Ownership Plan (ESOP) that allows your employees to purchase the company over time. This can often be a favorable option for business owners who want to significantly improve the tax impact of the sale of their business.

    Here are some things to consider:

    • How should you structure your ESOP in order to create the most favorable tax outcome for you, as well as a positive outcome for your business and employees?
    • Do you have long-term valuable employees? If you do not, and have a high turnover of employees, an ESOP will not work well.
    • What are the future prospects for your company? Your company needs to have a realistically viable future based on your current financial position (which should be low debt, good cash flow) and favorable long-term market conditions.You may choose to sell the business to a person(s) who is already involved in the business. It may be an employee, customer, friend, or family member. Often, in a friendly sale like this, the business owner finances the sale over a period of time. A friendly sale can also just mean that you are passing the business to your heirs, but often still taking an income from it during your retirement.

       

      Here are some things to consider:
       

    • Is the buyer(s) qualified (and motivated) to manage the business successfully?
    • Consider the impact on your relationship with the buyer if the business has issues or fails in the future. Are you willing to take that risk?
    • Will you be able to sell with terms that will allow to achieve your financial goals? (i.e. are you going to be too nice to the buyer and put yourself at a disadvantage?)You may simply choose to let someone else manage the business and start taking as much cash out of the business as possible until you are ready to retire, and then sell it at a lesser value or just let it die. Here are some things to consider:
    • Will you be able to get enough, and save enough cash to retiremcomfortably?
    • Are you willing to sacrifice the value of the business by taking cash out rather than growing the business?
    • How does this impact your employees, now or in the future?You may choose to simply liquidate the business by selling it in pieces when you’re ready to exit. Here are some things to consider:
    • Are you so valuable to the business that it is unlikely to be viable without you? Typically,dissolving the business is only the best option if this is true. If the business won’t be successful without you, who will buy it?
    • What are the assets of your business worth? Is it enough?You may also, as previously mentioned, continue to run the business forever once you have achieved maximum value. Regardless of which option you choose, you must plan for it over time, and your plan should begin with the end goal in mind.
       

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