A large Midwest ad agency had a complex ownership structure that consisted of two groups: first, silent partners who were members of the founder’s family, and second, a number of minority shareholders who comprised the agency’s senior management team and ran the business. The agency recognized that it needed to resolve key ownership issues and begin exit planning for the future. Complicating matters was the fact that each stakeholder had his or her own personal career and financial goals, and differing opinions on how the future direction of the business should look. They had been approached by a number of big agencies but were not sure if the acquisition route was in the best interest of all involved parties.
The agency decided to retain TobinLeff to help the agency’s board of directors understand the long-term options available to them and give them the hard data they needed to make informed decisions about their future direction. After analyzing their numbers in depth, our team developed a series of detailed financial models and related qualitative information that illustrated the pros, cons, mechanics, and financial workings of three different approaches to ownership transition: selling to a third-party buyer, preparing for a management-based buy-out (also called an MBO), or establishing an ESOP (an employee stock ownership plan). We presented our findings and recommendations to the board. As a result, they now recognize they have a wider range of options than they originally thought, and have begun the process of narrowing these options and laying the groundwork for a succession plan to provide a smooth and orderly transition of ownership that best meets the goals of all the stakeholders.
Not sure which exit planning strategy is right for your business? Get in contact with the TobinLeff team today to learn how to best prepare your business for its future sale.