Mary E. Marshall's Blog, page 5

Your Mission, Vision, and Values Are Your Business

We’ve all seen mission, vision, and values statements on lobby walls, in marketing material, or on websites. They’re usually well-crafted and are meant to convey the best intentions of the owners or the employees (hopefully both) so others understand what the company is all about. But how often do these statements achieve genuine understanding and trust between a business and its customers?

Most businesses go through the motions of creating mission, vision, and values statements. In many cases, those statements are forgotten almost as soon as they’re written. Everyone is glad the assignment is over so they can get on with their real work. And, while they might have believed all the words they crafted, no one sat down to actually think through how those concepts would be lived in the company on a daily basis. Perhaps they don’t get lived in the company. Or, perhaps at some point in the company’s evolution, its mission, vision, or values changed so that its daily activities are no longer in sync with its stated values. Incongruities like these are felt by your employees as well as your customers.

Most of the statements I encounter leave me wondering what the CEO (or committee, or marketing team, or whoever was tasked with writing the statements) was thinking because the words aren’t in keeping with what I see in the lobby, the marketing materials, or online. In other words, the words don’t feel authentic in the context of my actual experience. For example, a statement declaring that Joe’s Accounting is dedicated to the customer falls flat when I’m left waiting in the lobby for ten minutes before even being greeted.

Clarifying your mission, vision, and values isn’t just one of those assignments you have to get through so you can get on with business. Your mission, vision, and values are your business. Using the puzzle metaphor for creating or jumpstarting a business enterprise, think of these three concepts as the edge and corner pieces of the puzzle. Mission and vision are the framework for your business, because, without them, it’s almost impossible to complete the rest of the picture, and what you do put together will be rough and unbalanced. Values are the corner pieces because they keep your enterprise true, in all senses of the word.

Excerpted from my book, “Putting Together the Entrepreneurial Puzzle: The Ten Pieces Every Business Needs to Succeed.” Available here on Amazon. 

The post Your Mission, Vision, and Values Are Your Business appeared first on Mary Marshall // CEO Coach.

Grubbing It Out

Congratulations, founder! You made it! The final chapter in your leadership journey has finally arrived. You have graduated from the school of hard knocks, clawed your way to the top, maybe even broken the glass ceiling, and the day is finally—finally—here.

After countless meetings with brokers, bankers, venture capitalists, private-equity guys, accountants, auditors, and every other white-shirt-and-blue-tie guy in town, you finally have a deal to sell your baby. Your one-and-only business, started from scratch with a credit card and a few good friends. Here you are, with a deal for enough money to live the rest of your life without ever having to stress about money, employees, customers, technology, email, or even getting up in the morning if you don’t want to. You can do whatever you want, go wherever you want, for as long as you want, and never have to answer to anyone again.

Due diligence was a nightmare. Six long months of finance people digging through every bit of clean, moderately clean, and downright dirty piece of laundry you’ve got. They grilled you about your employees, scrubbed through your client contracts, analyzed every entry in your books, and forced you to rebuild your last three years of financials to their specifications. They dragged you all over the country to meet with other founders of businesses in their “roll-up strategy” and they’ve put you on display to board after board. They nearly broke you, but you knew it was worth it. You knew the payday was coming.

And here it is. Here’s the term sheet. Go ahead, sign it. Make it happen. The future is right there on your desk…

But wait. It wasn’t that bad. Maybe you could go through it again with a different buyer and get a BETTER deal! Maybe you could make enough money to live two or three lifetimes! Maybe you could double down for a few more years, make twice as much as this deal, and you’d be running with a whole different crowd, the big-money crowd. Oh, the temptation!

Your advisors say that your competition is on your heels and there’s a downturn in the market coming. The dealmakers say that “money is moving right now,” but predict a slowdown. Phffff! They’re probably just saying that so you’ll sign on the dotted line. If you can get a deal this big, why can’t you get a big- ger one? Look at you! You can do anything! And there’s power in saying no, right? Turning down this offer will just make the other, bigger buyers want you even more.

Let’s face it: it’s simply not enough money.

LET’S GET REAL

All right, poker players, if you want to go all-in with your last hand at the end of the night when you’ve been on a roll and sitting at the table for twelve hours, then you just go right ahead. But that’s not how we think great leaders should play the game.

There’s something fundamental missing from our CEO’s self-talk above: the consideration for what becomes of the business, the employees, and the customers after the deal is done. Money isn’t the only currency changing hands when a business is bought or sold. There are people involved at every level, people who will likely remain with the business long after you’re gone. So whether or not a “deal” is good for them should be an essential part of your decision-making.

There is also the legacy of your brand to consider—how you want it to be regarded and what you want it to be known for once it has changed hands. The brand itself may go away or be transformed into something new, but the story of what your business once was will always be there. How do you want that story to live on?

On the topic of actual currency: our CEO in the story above seems to be experiencing a self-inflicted doom loop. The doom loop occurs when you make more money than the people to your left but not as much as the people to your right, so you keep needing to make more money than the people to your right, then people next to them, and so on and so on. It’s a never-ending doom loop when you are playing the game of one-upmanship.

We could go on for chapters about our respective philosophies about money, the kind of relationship we believe business owners should have with money, and our personal opinions about the social responsibilities we think people with money should have. But suffice it to say, if you are in the most fortunate position of being able to sell your business—by choice, not by necessity—then we think you should think first and foremost about these three things:

Are you being offered what your business is truly worth on the market? Not what it is worth to you, not what you want to be paid back for all those years of barely making it, not what someone owes you for your pain and suffering of building a business, but what it is actually worth withoutWill your employees and customers be treated respectfully? Will others who have invested their time and talent into the success of the business be given a soft landing after an ownership transition?Are you clear there is nothing about your decision that is coming from a place of greed?

If you can answer yes to these three questions and there is a deal on your desk, then the time is now.

Congratulations, you made it! Now sit back, relax, and enjoy the legacy you’re leaving. Give yourself a nice long break and don’t do anything for a while. You’ve earned it.

But when you do decide to get back in the game, be sure to pass on what you’ve learned as a business leader. It’s on all of us to make better leaders and better businesses for the future.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post Grubbing It Out appeared first on Mary Marshall // CEO Coach.

Identity Theft

Sent: October 18, 11:29pm
From: Jodi, Founder & CEO
To: Jen
Subject: Margaritaville!

Jen,

I’m so glad you talked me into taking this trip! I’m so excited! Just imagine—three weeks in sunny Mexico. I don’t think I’ve ever taken a vacation for this long. Of course, I’ll bring my laptop, tablet, and cell phone. Things are smoking hot in sales right now, and I’ve got to be on call morning, noon, and night. I also need to find a printer and fax machine for check signing and some important contracts that are coming up for renewal.

Sent: October 19, 8:30am
From: Jen
To: Jodi, Founder & CEO
Subject: RE: Margaritaville!

I thought you hired a VP of Sales last year; can’t he handle it? And don’t you have a CFO now that can sign contracts?

Sent: October 19, 8:34am
From: Jodi, Founder & CEO
To: Jen
Subject: RE: RE: Margaritaville!

Oh no. I approve all of the important strategic sales like I always have. Our new CFO has check signing authority, but I sign the checks. I don’t always know what they are for, but I sign them just so it’s my signature on them. I’m the check signer. I also need to be available to answer questions.

Sent: October 19, 8:42am
From: Jen
To: Jodi, Founder & CEO
Subject: RE: RE: RE: Margaritaville!

I thought you rounded out your executive management team with top talent. What questions would come up that couldn’t wait? Can’t they answer the day-to-day questions? We have all kinds of outings and activities planned. Are you going to be glued to your cell phone the entire time?

Sent: October 19, 8:40pm
From: Jodi, Founder & CEO
To: Jen
Subject: RE: RE: RE: Margaritaville!

I’m the CEO. Of course, I’m going to be glued to my cell phone. It’s my company. I need to know everything that is going on. Always. I mean, I have to know, to be informed, in case I need to make a decision. I didn’t hire these people to make decisions on my behalf, I still need to make important decisions every day. Jim is doing a great job since I promoted him to president; mind you though, he’s not the CEO. I’m the CEO. I’m the decider.

Sent: October 19, 8:46am
From: Jen
To: Jodi, Founder & CEO
Subject: RE: RE: RE: RE: Margaritaville!

Okay. Well, I guess, if you must. Seems like it kind of defeats the purpose of having that highly paid executive team and a president when you don’t let them make any decisions. But at least you won’t be glued to social media all day like you usually are.

Sent: October 19, 8:50pm
From: Jodi, Founder & CEO
To: Jen
Subject: RE: RE: RE: RE: Margaritaville!

Right, well, I’ll have to tweet and post at least four times a day. We hired a social media vendor, and they do a pretty good job staying on top of it, but I have to post myself. I have to do it. I’m the only one that can do it the right way. It has to be me. After all, I’m the voice of the company.

Sent: October 19, 8:50am
From: Jen
To: Jodi, Founder & CEO
Subject: RE: RE: RE: RE: RE: Margaritaville!

Okay, but are you sure you can’t go offline for even a few days? I mean, what’s the worst that can happen with such a capable team?

Sent: October 19, 8:52pm
From: Jodi, Founder & CEO
To: Jen
Subject: RE: RE: RE: RE: RE: Margaritaville!

I’m telling you, listen, the place would burn straight down to the ground without me. To. The. Ground. Now, let’s have another margarita.

LET’S GET REAL

Okay, time for some tough love. If you built a successful company, there is going to come a time when you need the company much more than it needs you. If you were fortunate enough to acquire top senior talent and to have a steady and sustainable stream of revenue, and if that revenue is providing you with the means to explore other things that are fulfilling, then do so, guilt free.

Many business founders fail to recognize when they are no longer needed for the day-to-day operations of their business. Like Jodi, they convince themselves that they are desperately needed and depended upon by their staff, when in truth, they have become the meddling founder who not only isn’t needed, but ultimately, isn’t wanted. The energy that your business needed to get off the ground may not be the same kind of energy that it needs when it has matured. And if you are unable to evolve your own identity, much as your business has evolved, it will forever be in service to you and your need to maintain that identity rather than to its employees, customers, and industry. When founders recognize that they too need to evolve—that they too can grow and mature—so too can their businesses. Living co-dependently with your business is often times a requirement of a successful start-up: it’s what you know, who you are, and how you’ve operated – it is part of your identity. But that notion doesn’t mean you are a persona non grata without it. When your business matures to the point where it can operate without your attentiveness to every detail, recognize that milestone and revel in it! It’s part of the reward of entrepreneurship and yours for the taking. It’s the time at which you get to focus on your personal strategy: who you are, what you want, what makes you happy, and what plans you will lay out for the next chapters of your life.

Your team knows when you’re not adding value and when you are staying connected simply because you think you’re supposed to, or you don’t know what else to do. So, get off the deck and climb to the top of the mast. See what lies ahead for your business and what lies ahead for you. It’s the most valuable thing you can do for both parties.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post Identity Theft appeared first on Mary Marshall // CEO Coach.

The Phantom of the Offer

CEO Notes Journal Entry December 13

It’s finally going to happen!!! I spoke to the broker today, and he confirmed the buyer is very interested and that we’re in the ballpark of our asking price and the terms of the deal are all good. Boy, I never thought that this day would come; can’t wait to do the happy dance and tell everyone that we made it across the finish line!

I’m so ready to be done with this place. Twenty years of growing it, managing all the people, problems, money, and strategies—I need to get out. I’ll negotiate for a very short stint at the new place. Time to trade in the wife and find some new clubs! That reminds me, I had better start that process now, so she doesn’t get her grubby little hands on my pot of gold.

List of to-dos:

Meet with financial planner to discuss what to do with my $20MSet to go see property in NMPut deposit on sailboat—make final decision on extrasStart divorce proceedingsCEO Notes Journal Entry December 26

I went ahead and shared the news with the executive team— there were mixed reactions. Several were concerned about their jobs—and their shares. I assured them that both would be taken care of. I could see the relief around the table, but I was surprised they weren’t happier about the deal. Geez, this is what we have been working for! The CFO knew ahead of time, but even he was piling on with the Debbie Downers. I guess we should have said this is what we were working toward eventually. Who knows?

I cautioned them to keep it confidential, as the broker had told me to do. He said it could cause the deal to go south if word got out.

Met with the financial planner and the divorce lawyer. I’ll be serving the papers on Tubby shortly. My financial guy said I should hold off on the property and the boat until the deal closes, just to be sure, but I’m a gambler so went ahead and did both. I’m ready to go—the finish line is so close I can see it!

CEO Notes Journal Entry January 15

I thought we would be further along by now, but, Jesus, this is really dragging out. The financial review is taking forever, and my CFO is completely consumed by it. All the books are on the up-and-up, so I don’t get what the big deal is.

As expected, Tubby didn’t take being served with divorce papers well. She went ahead and hired this hotshot lawyer and thinks I’m going to be paying his fees—think again, honey. That’s on you!!

Apparently, someone leaked news about the sale, so a few more employees know something about it and have given notice. Really chafes my hide after all I’ve done for these guys. Can’t they hang on and make the company look good till we cross the finish line? So far, though, the executive team is holding strong.

We also got notice from the landlord that they are jacking up the rent significantly next year, but we’ll be out of here with the sale, so I’ll just wait them out. Greedy bastards.

CEO Notes Journal Entry February 10

Christ, I can’t believe this thing hasn’t closed yet. The financial review is done, and apparently, they want to revise the offer based on what they found—doesn’t make sense to me, but I’ll see what they have to say.

My nuts are really in a vice with “she who shall not be named.” She booted me out of my own house, so I’m living in a goddamn hotel. I can’t believe the law lets you do that—I’ve paid all these years for that place!! She should have to move out. I have to be careful what I say because I guess her shitbag attorney will be getting depositions from my employees about where I’ve been, what I’ve been doing, and where I might have hidden some money. Jesus. What a nightmare.

My sales VP gave her notice last week. That’s a real blow to the gut. She’s the best sales lead we’ve ever had, and her team is amazing. I offered her more money, but she said she didn’t like the folks we’ll be acquired by and has had many offers over the years, so she wanted to move on. I expect she’ll probably have a few more follow her out the door, but it doesn’t matter. We’ll be part of a global team, so some of them would have gotten sacked anyway.

CEO Notes Journal Entry February 13

We got the new offer today, and it’s not just a trim, it’s a freakin’ buzz cut. I can’t believe the broker let this happen. I told him no way in hell would I agree to that. He also said that I have to tell them that the sales VP left, which apparently meant a lot to them—they wanted her as part of the deal. This is quickly becoming a nightmare. I sent the broker back with a modest reduction.

CEO Notes Journal Entry February 29

Thank God Leap Year only happens every four years, because this day has literally been the worst of my life. The buyers pulled out completely—said that the financials didn’t support the price and that without my sales VP the revenue growth projections look shaky. Plus, they were spooked by the fact that we’d have to move since our lease is up and there are no options other than the ridiculous price the landlord offered.

They were also saying that my divorce proceedings make me a high risk, and they would require that to be finished before any deal could be done because they don’t want her to be a part of it. And that’s just getting worse by the day. My kids aren’t speaking to me, the Hampton Inn is a fleabag, and my CFO just quit without giving any notice at all.

When I brought in an outside CFO, I found out that he’d been stealing from me for a while, which is why the buyers went away. They figured it out before I did.

I lost the deposits on the NM property and my sailboat. I asked Tubby to take me back, but she’s already dating, losing weight, and said she’s much better off without my snoring, old, sorry ass beside her!

LET’S GET REAL

The deal ain’t done till it’s done, and the money is in the bank. Anytime someone starts spending dollars they don’t have, no good will follow. The first rule of preparing for a sale is to act as if it’s not happening. You MUST run your business as if you will be there tomorrow, next month, and next year—not only to protect your investment in the business but also to keep from falling so in love with the deal that you end up hating your business when it’s over.

Deals fall apart every day—more often than they come together. They require confidentiality, patience, and above all else, a steely resolve to get through it knowing that if it doesn’t work out, you have a terrific business to fall back on.

Don’t spend money you don’t have, don’t tell people who don’t absolutely need to know, carry on business as if nothing has changed, and don’t do anything stupid to screw it up—like start a divorce proceeding. Investors and buyers want stability, and so do employees, so you have to walk the tightrope between the two. It ain’t over till the fat lady sings, as they say.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

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Division of Multiples

MINUTES OF PHOENIX RISERS’ BOARD OF DIRECTORS MEETING NOVEMBER 18th

9:01: Discussion of sale begins. Strategic plan has been successful; revenue growth, gross margin, and profit margin all aligned and on track based on feedback from Shuster & Schuckster Investment House.

9:16: CFO discusses the desire to push the multiple discussion from a 1x revenue sales model to a multiple of net profit that he believes will work better for all involved. He wants a 10x on net profit, which was $4M last year and projected at $5M this year, for a $50M valuation.

9:22: CEO points out it’s a moot point as revenue is $50M, so at 10x net, it would be the same. And it’s easier to grow revenue than profits. He’s also concerned the industry standard would be far lower than 10x—more like 6x on net—which would result in a lower sale price. What’s the point here?

9:25: CFO discloses that he can work the books to show a much higher net profit; therefore, he can tweak the valuation higher if we can get Shuster & Schuckster to go for it.

9:27: CMO asks CFO how he plans on doing that.

9:29: CFO says it’s not hard and uses whiteboard to map it out. 9:30: CTO asks if this accounting method is legal.

9:33: Controller points out that it’s not within generally accepted accounting principles (GAAP).

9:37: CFO gets agitated and shows how he could potentially get us double the valuation by using this method. And shows how it’s legal.

9:40: CEO asks about tax implications as it seems like they might be significant.

9:42: CFO says no, it would all wash out in the end.

9:45: Controller interjects and says by her calculations it could be very significant in light of the fact that they would be recognizing revenue differently and could be subject to back taxes.

9:47: CFO shuts her down, saying he’s looked into it, and the likelihood of that happening is insignificant.

9:55: Vote is taken to give CFO authority to change accounting practice to increase the company’s reported net profit from 10% avg. to 21% avg.

Ayes – 8

Nays – 1 (Controller)

MEETING WITH SHUSTER & SCHUCKSTER BANKERS DECEMBER 12th

S&S: Wow, what’s with the new financials? Seems like your net went through the roof!

CFO: Yes, we’re taking advantage of a new accounting principle that allows us to restate our financials this way. We assume that this will allow us to increase our go-to-market price by almost twofold as we’ll be able to take advantage of a ten-times-net model of valuation.

S&S: Well, that is a possibility. But, of course, there will have to be a deduction in the valuation due to the outstanding tax bill you have now accrued due to the new accounting method.

CEO: Wait, what? I thought you said we wouldn’t have any additional tax liability if we went to this method?

CFO: We don’t; you guys are incorrect. I checked it out with the IRS and the State Department of Revenue before I amended our filing, and we fall in a different tax bracket now. I’ve been taking a night course at MSU; all the other CFOs are doing this too.

S&S: Guys, I hate to break it to you, but you’re going to pay more taxes and it really doesn’t change the valuation. In fact, it might lower it since your tax liability just went up exponentially. Did you consult a tax specialist before you did this?

CEO: This is ridiculous. We did this with the intent of raising the valuation, not lowering it! This is just wrong; you guys need to go to work for us and make it right!

S&S: Unfortunately, this is not in our control. The value of the business is the value of the business, regardless of how you guys want to play with the books. You can’t suddenly say that you’re making twice as much as before and think it will boost the value. It’s based on industry standards, your company history, the strategic value to the buyer, and your projections. I’m afraid you guys really screwed the pooch on this one. Might want to go back and see if you can reverse the accounting methods, because we can’t represent you at this stage—it looks like you’re cooking the books! Sorry, guys.

CEO: Go f* yourself! This is a f*@&ing disaster!

LET’S GET REAL

Buyers are smart—the value is the value is the value. The only way to increase it is to increase your revenue and profits simultaneously and find the strategic buyer that will benefit the most from buying you. No one will pay for cooked books or suspect accounting methods in search of a higher multiple, regardless of whether it’s a revenue model or a net-profit model.

If part of your strategic plan is to sell, research multiples from your industry and have a valuation done every few years, using various methods, to know in advance what a sale might net you. Waiting until you have a buyer or decide to sell is usually not when you should start doing your homework. You’d be taking the final for a class you have not attended.

Get smart and get prepared. Know what your company is worth and know what you can do to improve the valuation— that’s what you want to address in a strategic plan. Be like a Scout always be prepared when you do decide to sell.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post Division of Multiples appeared first on Mary Marshall // CEO Coach.

Loyalty to Comrades

Sent: September 1
From: Dean Chompers, CEO
To: Rick Dogood, Premium Investors
Subject: Offer Letter

Rick,

I have some serious concerns about the offer and the deal points.

In section 3, it discusses the payout packages for Larry and Joe, both of whom have been with me forever. I distinctly remember telling you that they needed to have positions in the new venture, not just a severance and buyout. What’s going on here?

Chomp

Sent: September 1
From: Rick Dogood, Premium Investors
To: Dean Chompers, CEO
Subject: RE: Offer Letter Chomp

Not to worry, my man. I’m still working it for you. We’ll get them something, but like we’ve said, these guys are a little long in the tooth and might really benefit by us just throwing some money at them, so you’re not saddled with deadwood in the new venture.

These guys really want you and the staff that’s under 50—can you see their point? Your buddies are way past their prime, and the last time they came up with anything innovative was WWII! Just kidding, but you get what I mean.

I know you’re loyal to them, but won’t money help ease the exit a bit? They can ride off in their golf carts and have enough to play every day and visit the new massage parlors next to Mar-a-Lago!

C’mon, let’s get creative and see if we can come up with something that will make their eyes pop and their wallets bulge.

Rick

Sent: September 2
From: Dean Chompers, CEO
To: Rick Dogood, Premium Investors
Subject: RE: RE: Offer Letter

Rick,

This is a deal breaker for me, Rick. These guys have been with me from the beginning. We graduated together. I know they may not be the sharpest tacks in the pack anymore, but they helped get me here, and I’m not going to give up on them now. Can’t we find someplace for them in the new org that will bring this strategy together and takes advantage of all they bring to the table? There has to be a way.

Let’s get creative with titles—how about Chief Fun Officer? Larry does stand-up comedy on weekends. Every company needs a laugh now and then, don’t they?

And Joe will literally do anything; he’s always been that kind of guy, so how about Chief Cleanup Hitter or Shortstop—you know, the extra guy on the field? You know it’s a great idea. Besides, the board and the rest of the company will not be happy about sacking their two mascots. They’re my brothers-in-arms!

Chomp

Sent: September 4
From: Rick Dogood, Premium Investors
To: Dean Chompers, CEO
Subject: RE: RE: RE: Offer Letter

I’m working it for ya, man, but it’s not looking good. The board of the new company is not liking this direction at all and is going to get cold feet if we can’t move past this.

Remember, they have your competitor in their sights if you don’t pull the trigger soon—they would rather have you guys, but they’re also willing to walk. But you know I’m in it for you first—you’re my client, and I’m here to make you happy and get you a killer deal!

The sale to this company lines up so perfectly with your strategic and exit plans. Your three-year deal is killer, and the buyout will be fantastic if you hit your numbers!

Besides, Larry and Joe will make millions on the stock if this does what we are projecting.

Let’s be reasonable here: if those guys are as loyal as you say, they’ll do anything for you, so why wouldn’t they take the package? This is really a win all around. Let’s set up a call and talk it through—you know I’m right. Together we can make this happen.

Believe me, we’ll give them as soft a landing as possible, but making up dumb titles will just make you look bad to the investors. Let’s get your board on the call too and get their opinion.

Rick

Sent: September 6
From: Dean Chompers, CEO
To: Rick Dogood, Premium Investors
Subject: RE: RE: RE: RE: Offer Letter

Rick,

I told you from the start, I’m not going to budge on this one. They are my foxhole buddies, and they’re coming with me. And I want them to have their current titles, Head of Engineering and Chief Technology Officer. I don’t need to talk to the board, and I don’t want to talk to anyone else. It’s my company and my decision.

My wife told me to let them stay, so now I know I’m doing the right thing—if you can’t stay loyal to your friends, then who can you count on? So, you just go tell those dirty, money-grubbing bastards that if they want me and my company, they have to take all of us or none of us.

Chomp

Sent: September 12
From: Rick Dogood, Premium Investors
To: Dean Chompers, CEO
Subject: RE: RE: RE: RE: RE: Offer Letter Chomp,

I tried to call you multiple times to discuss this, but since I can’t reach you, here’s the final offer. $20M upfront, contracts for you and all execs except Larry and Joe, same buyout and share price and deal points as before. If you want to keep Larry and Joe, you can, but it comes out of your contract fee and they get no shares in the new company, only what they currently own. They cannot keep their current positions, so feel free to make up whatever titles you want.

You’ll notice the offer is now $5M less, which is their estimation of how much drag the new company will have with your buddies on board, even in made-up positions.

They are done negotiating, so this is the final offer. You have 24 hours to decide.

Rick

In the end…

Chomp dithered on the decision—his buddies or $5M+ in his pocket with much more down the road? Sell to the best strategic buyer he could imagine, or place a higher value on friendship and loyalty? The deadline passed, and the investors pulled the offer and went to his competitor, and that deal was closed in record time. Chomp and his Chompsters struggled with cash flow and technology while the new venture cleaned their clock.

The company closed two years later, after filing for Chapter 7 bankruptcy—not the ending he imagined after thirty years of building the company. But the band stayed together—Larry, Joe, and Chomp (aka, Mo). All of them are still living by Mar-a-Lago but can’t afford golf or massages.

LET’S GET REAL

Loyalty to comrades will act like an anchor dropped from a boat traveling at full speed. The envisioned strategy will never be fulfilled if you have people on board that have long outlived their usefulness—either because they didn’t grow with the business or simply don’t have the skills to move up the chain or learn new things.

All good things must come to an end. And when you employ friends and family, don’t count on a buyer placing the same value on them as you do. In fact, it’s likely to really drag your valuation down when it’s clear the company has performed in spite of them being involved.

When working an exit strategy, think long and hard about who will really be of value to a potential buyer, and have those hard conversations with the rest early on. Money will help grease the exit, but you’ll have more of it if you do the right thing and help them out before you have to carry them on your back.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post Loyalty to Comrades appeared first on Mary Marshall // CEO Coach.

The Impossible Divorce

Sent: November 2, 4:23 p.m.
From: Stan, CEO, Stan the Man Movers
To: Exec. Team Partners
Subject: Valuation & Offer

Guys,

The valuation came back today from Princeling Partners, and it looks exactly like what we’ve been hunting for $25M plus shares in the new company. So, we all benefit greatly. I think it’s the right time to go ahead and get serious about this.

See the attached and let’s discuss in our meeting on Friday.

STM (Stan the Man)

Sent: November 6, 2:00 p.m.
From: Stan, CEO, Stan the Man Movers
To: Exec. Team Partners
Subject: Meeting Outcome

Guys,

Well, that meeting didn’t go as we planned, but let’s all pull together and come to a consensus on this. I know some of you are afraid of selling, but let’s talk about it. I gave you all shares in the business years ago so we could all benefit from an event like this—I really don’t understand what the hesitation is.

Friday huddle to work it out. I’ll go with the group, but let’s be reasonable about this. I don’t want to have to point out that I have 43 percent of all the shares!

Just kidding. Let’s talk on Friday.

Sent: November 10, 12:10 p.m.
From: Stan, CEO, Stan the Man Movers
To: Exec. Team Partners
Subject: Decision

Guys,

I think we can all agree that that was a horrible meeting. However, we finally got a consensus that we’ll move ahead with Princeling Partners to represent us in going to market. I’ll get the formal engagement moving forward.

STM

Sent: November 10, 12:27 p.m.
From: Joanie, CFO
To: CEO; Exec. Team Partners
Subject: RE: Decision

STM,

I think I speak for everyone in saying that we were disappointed that you forced us to agree to sell. We are happy with the current company and the outcomes. It seems foolish to want to sell now, just when we’re doing so well. While we will forever be grateful for your generosity in giving us our original shares, we also want what’s best for the business and all of its employees, which is why we agreed to explore options.

Joanie, CFO

Sent: November 22, 1:56 p.m.
From: Stan, CEO, Stan the Man Movers
To: Exec. Team Partners
Subject: Letter of Intent

Guys,

Really happy to share that we have a great first letter of intent from a terrific partner that I’m really excited about. As the point man for this, I’ll keep you all informed. I’ve created a private shared drive for all the materials, so you’re all kept in the loop as partners. First step is the financial review, so Joanie will be instrumental in making this happen!

STM

Sent: November 23, 10:05 a.m.
From: Joanie, CFO
To: CEO; Exec. Team Partners
Subject: RE: Letter of Intent

Team,

Just a reminder: I’ll be out over the Thanksgiving holiday, and since I have a ton of PTO that I haven’t used, I’m going to go ahead and take off till the first of the year to use it up. You’ll be fine with Sandy, our controller, although I wouldn’t involve her in the sale stuff—you know how she can gossip!

Happy holidays, everyone!

Sent: November 23, 10:44 a.m.
From: Stan, CEO, Stan the Man Movers
To: Joanie, CFO
Subject: Vacation

Joanie,

Please come talk with me about this vacation you are taking. We need you as a part of the team to walk them through our financials.

STM

PHONE CALL TO PRINCELING PARTNERS:

STM: Hey, guys, Joanie is going to be out till the first of the year. Is there a way we can postpone the review?

Princeling: Nope. Did you know this?

STM: Well, she says she told me, but I sure don’t remember it. Sandy, our controller, can do it, but she’s likely to spill the beans. I guess I could do it if that works? I know where most of it is.

Princeling: Well, that will have to work for now. I hope that nothing comes up that we don’t know about.

Sent: December 16, 3:32 p.m.
From: Stan, CEO, Stan the Man Movers
To: Exec. Team Partners
Subject: Review Update

Guys,

We are only about a third of the way through the review as I’m winging it without Joanie. For whatever reason, a lot of the records we need are missing or misfiled. I guess she implemented a new filing system in November that no one understands. The buyer is getting a little anxious about this, so I’m wondering if one of you could help me. I really want to project strength and competence among the partners, so who’s in?

STM

Sent: December 17, 2:08 p.m.
From: Steven, CTO
To: CEO; Exec. Team
Subject: RE: Review Update

STM,

I know this is something you really want, Stan, but I have to say I’m still having doubts. Maybe Joanie being out is a sign that this isn’t the right time. We can do what these buyers want us to do, so how about we pull it off the market and give it a go ourselves? I think I speak for the rest of the team when I say this.

Steven

Sent: December 17, 2:11 p.m.
From: Exec. Team
To: CEO; Exec. Team Partners
Subject: RE: RE: Review Update

Ditto—hey, we finally agree on something!

LET’S GET REAL

Trying to get two people to agree on something is difficult. Dealing with multiple partners can be excruciating. So, begin with the end in mind. BEFORE you offer partnerships with active, voting shares to anyone in your company, spell out the rules of the road, such as who gets to make the big decisions about when and to whom to sell the business—let alone for how much.

If you’re already in a partnership that is less than cordial, time to fix it before you decide to sell. Get a mediator, get a lawyer, or get anyone else to help the two of you duke it out about the rules of partnership. You might consider a shotgun clause: if you offer to buy out your partner for any amount and they say no, they can buy you out for the same amount. This prevents people from making frivolous offers.

Most business partnerships are entered into with about as much thought as going to the pound and picking out a dog. At least a dog is trainable and usually does what you say—a partner is another breed altogether. A business partnership is messy and trying to sell with partnerships can become akin to the War of the Roses. Start the partnership with some simple rules in place, and the war will likely be more of a skirmish than the mother of all battles.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post The Impossible Divorce appeared first on Mary Marshall // CEO Coach.

Getting Sweet on Sugar Daddy

Sent: December 12, 2:10 p.m.
From: Savannah, CEO
To: James, Partner, Private Equity Investments of North America
Subject: Dinner? Holiday cocktail?

Hi James,

We met at a recent WPO conference. I hope you remember me. I am the founder and CEO of Pouty & Pretty Cosmetics.

I really enjoyed our conversation! You gave me such great advice about growing my business, and it left me energized and ambitious about the future. You have such amazing experience growing businesses like mine.

I was also really flattered that you think it has such potential. I’d love, love, love to meet up with you again sometime soon. Let me know if you’re ever in town, or if I come out your way, I’ll let you know. Either way, let’s find a way to keep in touch.

All my very best, Savannah

Sent: December 12, 3:22 p.m.
From: James, Partner, Private Equity Investments of North America
To: Savannah, CEO, Pouty & Pretty Cosmetics
Subject: RE: Dinner? Holiday cocktail?

Well, hello there. How nice to hear from you, Savannah. Of course, I remember you. How could I not? I’d also love, love, love to get together and hear more about your business. Not only does your business have great potential, YOU have great potential.

Aligning with PPEI North America would be a very smart move for you. In fact, if I do say so myself, I could make you a rock star in the cosmetics industry.

Text me. Jim

All right! You snagged one! Great job, Savannah. You’ve got your first big potential investor on the hook. Now all you have to do is work it, girl. Work. It. Jim’s no dummy—he’s been around the block a few times—and he knows the best way to get a smokin’-hot deal on a budding business is to flatter the daylights out of the unsuspecting founder and make her feel like she’s the most brilliant woman in the world. Not only are you going to have a wealthy benefactor on your side, but you’re also going to be hanging with the dealmakers, the “PE guys.” As they say, now you’re peeing in the grass with the big dogs.

So, make your appointment now for a full spa day before you see Jim next, because he’s your golden ticket. Pretty soon the cash will be flowing in, and you’ll be on a press blitz like no other, announcing to the world your big, new business deal. Look at you go! Way to break the glass ceiling!

LET’S GET REAL

RANT ALERT!

We’d like to think a scenario like this is a thing of the past, but it’s not. It’s very real, and it happens every day. So, this is our chance to speak directly to women like Savannah in the business world and say one thing: Show some self-respect and self-awareness and knock it off.

Look, it’s true: the big-money world is still a man’s game. Look around the private equity and banking world and tell us that’s not true. It’s true, and it’s going to remain true until we get more women in positions of power—in government and in the private sector. Across the board, we are still in the minority. Hell, we still have to work the equivalent of three additional months a year on average to even make equal pay to what most men are paid.

So, Savannah—and women like Savannah—why do you have to make it harder for the rest of us by believing that you have to charm your way into the big-money game? Or into any business game, for that matter? Most of us who have bought or sold businesses have been the only female in the boardroom before. It can be intimidating and throw you off your best game. But we are counting on you to step it up and show up with your strategic thinking and your personal power, not a demure-and-fawning-high-school-girl act.

Sound rough? It’s meant to. But listen up, we’re not done. Charming your way to the top, or into the big-money game, is only going to achieve one thing: getting taken to the cleaners— and it will be your fault.

If you show up with a flirty, forward attitude, you will have a giant sign over your head that says, “I got lucky and started this business, and I have no f$*#ing idea what I’m doing, so please flatter me and give me a 2x multiple and make me feel great about it!” Then you can go brag to your business friends and other female CEOs about how brilliant you are now that you are on the inside of the private-equity world. Please.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post Getting Sweet on Sugar Daddy appeared first on Mary Marshall // CEO Coach.

Lost and Founder

Sent: June 22, 2:00 p.m.
From: Jane, Director of Marketing
To: Bob, Director of Business Development
Subject: Craig’s Role

Bob,

Have you seen Craig this week at all? I thought he was coming to the quarterly marketing meeting, but he was a no-show. Does he have a new schedule, or…?

Jane

Sent: June 22, 3:00 p.m.
From: Bob, Director of Business Development
To: Jane, Director of Marketing
CC: Ed, Director of Operations
Subject: RE: Craig’s Role

Jane,

I think he went fishing on Monday. He put some pictures on the company’s Facebook page that I think he meant to put on his personal page. Ed, do you know if he interviewed that candidate you have for supervisor? I saw the guy in the lobby; he looked lost.

Bob

Sent: June 22, 3:30 p.m.
From: Ed, Director of Operations
To: Jane, Director of Marketing; Bob, Director of Business Development
CC: Sue, Receptionist
Subject: RE: RE: Craig’s Role

Bob and Jane,

Nope. He was a no-show. He said he wanted to interview all candidates for supervisory positions, but he missed the last one and was a no-show for this one. I need to make this hire, so I’m just going to do it without him.

Sue, do you know where Craig is?

Ed

Sent: June 22, 4:00 p.m.
From: Sue, Receptionist
To: Jane, Director of Marketing; Bob, Director of Business Development; Ed, Director of Operations
CC: Matthew, COO
Subject: RE: RE: RE: Craig’s Role

All,

I do not know where Craig is, but I usually keep his calendar. I can tell you that the bank is coming in for a three-hour meeting tomorrow, so I assume he’ll be here.

Matthew, are you in that meeting?

Sue

Sent: June 22, 4:30 p.m.
From: Matthew, COO
To: Jane, Director of Marketing; Bob, Director of Business Development; Ed, Director of Operations; Sue, Receptionist
CC: Jill, Director of HR
Subject: RE: RE: RE: RE: Craig’s Role

All,

Craig has decided to take on a more limited role as CEO so that his schedule is more flexible. Please copy me on any important meetings you were expecting him to be in.

Matthew

Sent: June 22, 5:00 p.m.
From: Bob, Director of Business Development
To: Jane, Director of Marketing; Ed, Director of Operations; Sue, Receptionist; Matthew, COO
CC: Jill, Director of HR
Subject: RE: RE: RE: RE: RE: Craig’s Role

Was he going to announce this to the management team, or are we just now finding this out? Who is approving my budget? Who’s on point to close the new business that we just landed?

Bob

Sent: June 22, 5:30 p.m.
From: Jane, Director of Marketing
To: Bob, Director of Business Development; Jane, Director of Marketing; Ed, Director of Operations; Sue, Receptionist; Matthew, COO CC: Jill, Director of HR
Subject: RE: RE: RE: RE: RE: RE: Craig’s Role

I have a quarterly strategic-marketing plan that was due today. Who am I presenting to now?

Jane

Sent: June 22, 6:00 p.m.
From: Sue, Receptionist
To: Bob, Director of Business Development; Jane, Director of Marketing; Ed, Director of Operations; Sue, Receptionist; Matthew, COO CC: Jill, Director of HR
Subject: RE: RE: RE: RE: RE: RE: RE: Craig’s Role

He’s supposed to tweet something about company strategy. It’s on his calendar. Should I tweet something for him? What should it say?

Sue

LET’S GET REAL

And in a few short hours on a random Monday, Craig completely abdicated his position as CEO. Congrats on your retirement, Craig!

“Surround yourself with great people and let them do their jobs” is excellent advice for any leader or CEO. Never forget it and practice it every day. But it does not mean that as a CEO you can or should be an absentee leader, and it certainly does not mean the role of CEO isn’t essential and needed. Many leaders— and this is especially true for company founders—lose sight of their job description and duties over time. They surround themselves with capable and talented people, and the actual job description of the CEO becomes muddled. These leaders often feel nonessential to the business, or they may feel that they are too tempted to meddle, so they dissociate themselves from the day-to-day operations.

Once their businesses grow to the point of having strong senior-management teams, many founders have reached their burnout point. They may have been at it for ten to twenty years, or perhaps the business has outgrown them, and they no longer feel like they know enough about the business to add value. Whatever the case may be, take a break to rejuvenate if you must, but do not abdicate such an important role without being crystal clear with your team about who’s really running the show.

If you are the CEO and intend to remain the CEO, you must do the job. Consider writing, or having someone else write, a renewed job description with specific duties and responsibilities. Are you doing this job? Do you want to do this job? Because if you don’t, you can’t have the title regardless of your ownership status.

If you’re an owner, consider taking yourself off the org chart and promoting your number 2 person to president or CEO. If you are not an owner and are merely holding a title with no accountability, then you’re doing the business a disservice.

Chief Executive Officer is the highest-ranking position in any business, and whoever has this title is accountable for all management decisions. This role means you show up and do the job, or you make the toughest management decision of them all, and you make it for yourself: you’re not the right person for the job.

To get your copy of “How (NOT) to Create a Winning Strategy” click here.

The post Lost and Founder appeared first on Mary Marshall // CEO Coach.

Exit Ramp Detours

Strategies that don’t start with the end goal in mind will usually miss the exit ramp every time. Founders of small to midsize companies rarely think about the day they will sell or be forced out of the business. Unless, of course, they run a tech company funded by venture-backed capital that wants nothing more than to take an exit to line their pockets and flip to the next big thing. All the Silicon Valley wannabes will have gobs of support to make sure they take the right exit ramp at the right time—the rest of you will actually have to plan for it.

Founders are often caught flat-footed when the best offer of their life comes along. Like someone fitted with lead boots, they fail to act, and the buyer goes sailing by like a cigarette boat in the Hamptons. Or they are so entranced with the sketchy investment banker who wants to fleece the company, they fail to see their company is being stolen right out from under them. Worse yet is the founder whose company has long outgrown his skill set and who is literally paralyzed with fear about what comes next. Well, if he stays in paralysis too long, it will be the wailing a life-support machine makes when someone pulls the plug.

Strategic offer, selling to friends, maybe even family? Who knows? “I’ll know it when I see it”—the common response from the entrepreneur who has no idea what their business is even worth. The need for cash or a certain dollar amount has no real connection to the value of the business—not that they actually know what the value of the business is. As the saying goes, “If you don’t know where you’re going, any road will take you there.” So goes the road toward an exit—hop on and pray the road is paved and the sign to the exit ramp is lined like the yellow brick road.

If any of this sounds familiar, you could be headed down the road to Nowhere when you decide to leave your business. Read the upcoming eight noteworthy stories of how NOT to create a strategy for exiting your business, and maybe, just maybe, you’ll pick up a few tips on how to do it right. Unless of course, you picture yourself like Cruella de Vil and absolutely have to have all one hundred puppies for yourself.

The post Exit Ramp Detours appeared first on Mary Marshall // CEO Coach.