Who Sits on Your Personal Board of Directors?
My wife and I recently received the WINTER 2016-2017 “Financial Perspectives” from Raymond James. The core of this letter focused on “Building your Financial Team: Who Should make the Cut?” The article highlighted for me a common conversation we have with clients and prospective clients alike: Who are your advisors? We are asked often what advice we can offer to business owners. Regardless of how long a business owner has been in business, 6 months , 6 years or 60 years, our first answer is be sure to surround yourself with complimentary advisors in law, finance, accounting, real estate, marketing & sales, operations, human resources and information technology. We caution folks to be sure your advisors are qualified in your industry and their area of expertise. Too often we see business owners who rely on their high school friends and college buddies simply because they know them and they happen to have a title reflecting their expertise. We all have people we trust that we go to when we encounter a life situation whether it is at work, at home and even church.
In our area of expertise, most of us have been involved with millions of dollars of transactions representing 100’s of business transactions (both buying and selling). Our clients, and in some cases, the buyers as well have little or no experience in transactions. And they tend to speak in terms of metrics that have nothing to do with the value sought or realized. I can’t begin to tell you how many times people want to jump immediately to multiples of EBITDA (Earnings Before Interest Taxes Depreciation and Amortization), Revenues, Cash flow or Book Value. And then they want to compare them for what a friend realized. The companies they are using for comparison may not even be in the same industry. They probably do not have the same debt and equity structure. Their margins are different due to cultural differences. We use these multiples as a way of representing what the value AFTER a thorough analysis is done of the company, the market and the industry. Make sure you are working with knowledgeable professionals.
Personally and professionally we should employ a Team of Advisors that represent different areas of expertise. For example, my Team of Advisors includes:
Various Attorneys and CPAs (depending on topic)
Visit our BLOG at www.capstonebusinessadvisors.com/BLOG and join in on this discussion and share with us who sits on your Team of Advisors. As you ponder your team’s makeup and see an opportunity for us to join your team, please do not hesitate to reach out to us. We would love to be on your team!
Posted on 02/28/2017 3:04 PM by Rich Miles
Do You Understand the Other Side
Do You Understand the Other Side?
Do You Understand the Other side?
As we weather the recent election and the attendant rhetoric, I was reminded of a book I read years ago: How to Speak How to Listen by Theodore Adler. The conclusion I reached from this book was if you cannot defend the other person’s point of view, then you have not had a conversation. That’s not to say that you need to agree with the other point of view, you just need to be able to defend their position. Reminds me of the Debate Club in high school. You never knew which side of an argument you were going to be asked to defend therefore you had to be prepared for both sides.
I am reminded of this approach almost daily as we always seem to be negotiating something: at home, at work or where ever we are. As we negotiate contracts, you can win your argument by showing an understanding of the other side. Whether it is empathy, sympathy or just courtesy, understanding the other side goes a long way to resolution. I reflect on Edward Lewis (Richard Gere) in Pretty Woman when he changed the shipbuilding deal with James Morse (Ralph Bellamy), much to the chagrin of his counsel, Philip Stuckey (Jason Alexander). (Yes, I’ve watched Pretty Woman a few times.) You should always be striving to achieve a win win resolution.
So, the next time you find yourself in a negotiating position, ask yourself what are you missing in understanding the other side? How would you be reacting if you were the other side? Do I really understand the other person’s point of view?
Let us know about a recent time where, in a negotiation or discussion, you really listened to the other side and departed having a better understanding of the other position. Or, share your thoughts on whether you think a win-win is truly possible. We’d like to hear from you!
Posted on 02/07/2017 11:00 AM by Rich Miles