Five Steps to Retire and Sell Your Business
You’ve successfully started and grown your business, but now you can start to imagine the day that you might want to spend more time on the golf course, with grand kids, or just hanging around the house driving your spouse crazy. It isn’t quite time to retire yet, but for the first time (or maybe more), you can envision selling your business.
NOW is the time to plan ahead and take some steps to increase the value of what is most likely the largest asset you own. There are a handful of things that you can do today that will put more dollars in your pocket when you sell in five years that you won’t be able to do if you wait until you get closer.
1. Institutionalize the Management Team: Unless you would like to continue on with the business for a long period of time after a sale, put a management team in place that can take over the day to day responsibility for the business. If you are still running the day to day operations when you are ready to retire, to get any value for your business, you are going to need to stay for two or more years post-sale to transition the business to the new owner.
2. Upgrade Your Financials: Make sure your company’s financials are professionally done and in good shape. In order for a sale to occur, you’ll need to be able to provide detailed financials that can tell the right story to the buyer. While internal financials may be ok to run your business, a buyer will want to see significant involvement by an outside accountant. Along these lines, think about getting your financials audited (or at least reviewed) the final year or two you intend to own your company.
3. Talk to an Estate Planner: Make an appointment with an estate planning professional and explain your interest in exiting your business over time. There are a variety of tools you can put in place well before you sell that may allow for a lot of tax mitigation. These tools are harder to use as you get closer to a transaction.
4. Remove Risk: While it may be difficult, try to remove as much risk as you can from the business as you get closer to the time you are looking to sell. Make sure important contracts, leases, and other important relationships get renewed for so that they extend for as long a time as possible downstream of a sale. Buyers hate risk – help them by removing it.
5. Talk to an M&A Adviser: Talk to a competent M&A advisor TODAY. Many advisors are more than willing to create long term relationships with a potential client. Given their experience, a good advisor can potentially add a lot of value for you by helping analyze how to make your company more valuable at the time you want to sell. Often, these sorts of adjustments take time, and are much harder to make as the time of an actual sale gets closer.
Most of these items are things you can do relatively easily over five years, but are virtually impossible to do when a sale is imminent. But, many business owners miss out on a significant portion of value because they don’t take the time to plan when they can.
Rosie the Robot, Amazon, and the Future of RAAI
Written by: Travis Briggs, CEO at ROBO Global US
It’s tough to find a kid out there who hasn’t dreamed about robots. Long before artificial intelligence existed in the real world, the idea of a non-human entity that could act and think like a human has been rooted in our imaginations. According to Greek legends, Cadmus turned dragon teeth into soldiers, Hephaestus fabricated tables that could “walk” on their own three legs, and Talos, perhaps the original “Tin Man,” defended Crete. Of course, in our own times, modern storytellers have added hundreds of new examples to the mix. Many of us grew up watching Rosie the Robot on The Jetsons. As we got older, the stories got more sophisticated. “Hal” in 2001: A Space Odyssey was soon followed by R2-D2 and C-3PO in the original Star Wars trilogy. RoboCop, Interstellar, and Ex Machina are just a few of the recent additions to the list.
Maybe it’s because these stories are such a part of our culture that few people realize just how far robotics has advanced today—and that artificial intelligence is anything but a futuristic fantasy. Ask anyone outside the industry how modern-day robots and artificial intelligence (AI) are used in the real world, and the answers are usually pretty generic. Surgical robots. Self-driving cars. Amazon’s Alexa. What remains a mystery to most is the immense and fast-growing role the combination of robotics automation and artificial intelligence, or RAAI (pronounced “ray”), plays in nearly every aspect of our everyday lives.
Today, shopping online is something most of us take for granted, and yet eCommerce is still in its relative infancy. Despite double-digit growth in the past four years, only 8% of total retail spending is currently done online. That number is growing every day. Business headlines in July announced that Amazon was on a hiring spree to add another 50K fulfillment employees to its already massive workforce. While that certainly reflects the shift from brick-and-mortar to web-based retail, it doesn’t even begin to tell the story of what this growth means for the technology and application firms that deliver the RAAI tools required to support the momentum of eCommerce. In 2017, only 5% of the warehouses that fuel eCommerce are even partially automated. This means that to keep up with demand, the application of RAAI will have to accelerate—and fast. In fact, RAAI is a key driver of success for top e-retailers like Amazon, Apple, and Wal-Mart as they strive to meet the explosion in online sales.
From an investor’s perspective, this fast-growing demand for robotics, automation and artificial intelligence is a promising opportunity—especially in logistics automation that includes the tools and technologies that drive efficiencies across complex retail supply chains. Considering the fact that four of the top ten supply chain automation players were acquired in the past three years, it’s clear that the industry is transforming rapidly. Amazon’s introduction of Prime delivery (which itself requires incredibly sophisticated logistics operations) was only made possible by its 2012 acquisition of Kiva Systems, the pioneer of autonomous mobile robots for warehouses and supply chains. Amazon recently upped the ante yet again with its recent acquisition of Whole Foods Market, which not only adds 450 warehouses to its immense logistics network, but is also expected to be a game-changer for the online grocery retail industry.
Clearly Amazon isn’t the only major driver of innovation in logistics automation. It’s just the largest, at least for the moment. It’s no wonder that many RAAI companies have outperformed the S&P500 in the past three years. And while some investors have worried that the RAAI movement is at risk of creating its own tech bubble, the growth of eCommerce is showing no signs of reaching a peak. In fact, if the online retail industry comes even close to achieving the growth predicted—of doubling to an amazing $4 trillion by 2020—it’s likely that logistics automation is still in the early stages of adoption. For best-of-breed players in every area of logistics automation, from equipment, software, and services to supply chain automation technology providers, the potential for growth is tremendous.
How can investors take advantage of the growth in robotics, automation, and artificial intelligence?
One simple way to track the performance of these markets is through the ROBO Global Robotics & Automation Index. The logistics subsector currently accounts for around 9% of the index and is the best performing subsector since its inception. The index includes leading players in every area of RAAI, including material handling systems, automated storage and retrieval systems, enterprise asset intelligence, and supply chain management software across a wide range of geographies and market capitalizations. Our index is research based and we apply quality filters to identify the best high growth companies that enable this infrastructure and technology that is driving the revolution in the retail and distribution world.
When I was a kid, I may have dreamed of having a Rosie the Robot of my own to help do my chores, but I certainly had no idea how her 21st century successors would revolutionize how we shop, where we shop, and even how we receive what we buy - often via delivery to our doorstep on the very same day. Of course, the use of RAAI is by no means limited to eCommerce. It’s driving transformative change in nearly every industry. But when it comes to enabling the logistics automation required to support a level of growth rarely seen in any industry, RAAI has a lot of legs to stand on—even if those “legs” are anything but human.
To learn more, download A Look Into Logistics Automation, our July 2017 whitepaper on the evolution and opportunity of logistics automation.
The ROBO Global® Robotics and Automation Index and the ROBO Global® Robotics and Automation UCITS Index (the “Indices”) are the property of ROBO who have contracted with Solactive AG to calculate and maintain the Indices. Past performance of an index is not a guarantee of future results. It is not intended that anything stated above should be construed as an offer or invitation to buy or sell any investment in any Investment Fund or other investment vehicle referred to in this website, or for potential investors to engage in any investment activity.
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