Paul Cissel has been part of over 52 mergers and acquisitions over the course of his career. With 42 years of experience in the IT industry, and 23 of those as a serial entrepreneur, Cissel’s mission is to help MSPs large and small uncover and understand new ways to add value to their business.
And by value-added, he’s not talking about some mythical sales projection number or reshuffling KPIs. Cissel’s experience-driven passion is helping businesses increase their enterprise value, which is a direct reflection of the price for which they can be acquired or directly sold. For example, most MSP owners don’t understand what actions create top performance and, hence, significantly undervalue their business. Let’s say your business is worth $2 million. Cissel is here to help you understand and implement processes that make the same business worth $5 million.
And if you’re building an exit strategy or preparing your company for a merger or acquisition, those numbers are extremely important, especially to the baby boomer generation.
According to the Exit Planning Institute, 65%-70% of MSP owners are baby boomers, and as such, they are set to retire within the next 10 years. This represents a huge market shake-up and means that over the next 10 years, 4.5 million businesses and over $10 trillion will exit or transition within the marketplace.
“So, do you have a transition plan?” Cissel asks. “Do you have a three- or a five-year plan? Do you have an exit strategy? What I’ve found is that most people don’t.”
Cissel cites three main challenges that he sees business owners face when they look to transition or sell their business.
The first challenge is simply what Cissel calls “overall uncertainty and readiness.” This is simply the natural human tendency to avoid change, put things off and delay thinking about the future.
“A lot of people at this stage are asking, ‘What’s next?’” Cissel says. “And they’re really not sure.”
Challenge number two is what Cissel calls the “five Ds,” and many if not all of the Ds particularly affect the baby boomer generation at this stage of life. They are death, disability, divorce, distress and disagreement. Any combination of these five can impact the decision of a business owner to sell and how they are able to go about it, Cissel notes.
Finally – the money. Challenge number three is what Cissel calls the “income vs. value conundrum,” and it is the misstep that he sees the majority of small business owners make that causes them to leave significant amounts of cash on the table. And why? Because “they are focused on current income and not enterprise value,” Cissel says.
So, what’s the solution? In a word, readiness.
“As owners and leaders, it is our responsibility to our families, employees, customers and communities to make sure our companies can survive and thrive, even without us,” Cissel notes.