[PPT] - A&D Family-Owned Businesses: Surviving the Test of Time Randal PowerPoint Presentation

SLIDE 1

A&D Family-Owned Businesses:

Surviving the Test of Time

Randal Breaux

SLIDE 2

“Family Business”

Mom & Pop?

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“Family Business”

Over 80% of private businesses in AZ over $5 million revenue

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SLIDE 5

“Family Business”

Big Deal
Lots of Companies
Lots of People
Special Issues
Often Ignored

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Your Results May Vary

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Small Business Bureaucracy:

The Transition Challenge

Randal Breaux

SLIDE 8

Leadership Transition

Fortune 500 CEO

Operational Transferability
Leadership Succession
Ownership Transfer
Personal Financial Issues
Life After Issues

Randal Breaux

SLIDE 9

Leadership Transition

Family Business

Operational Transferability
Leadership Succession
Ownership Transfer
Personal Financial Issues
Life After Issues

Randal Breaux

SLIDE 10

Private Businesses - 2025

Leaving 60% of US private businesses are

wned by

“Baby Boomers”

(Baby Boomers)

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Transition Options:

Choices & Consequences

Randal Breaux

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The Most Popular Option

80% Four out of five dentists recommend sugarless gum for their patients who chew gum.

Randal Breaux

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The Most Popular Option

Four out of five dentists recommend sugarless gum for their patients who chew gum.

Randal Breaux

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The Most Popular Option

Cheap
Easy
No Planning
No Prep

80%

Transition ^

Randal Breaux

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The Most Popular Option

Cheap
Easy
No Planning
No Prep

80%

^

Randal Breaux Liquidation

Transition

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Liquidation?

100 200 300 400 500 600 700 800

Value of Apple Computer Intangible 70% Tangible 30%

Randal Breaux

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Liquidation?

100 200 300 400 500 600 700 800

Value of Apple Computer Intangible Tangible 70% 30%

Randal Breaux

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Liquidation?

100 200 300 400 500 600 700 800

Value of Apple Computer Intangible Tangible 70% 30%

Discount

Randal Breaux

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Liquidation?

100 200 300 400 500 600 700 800

Value of Apple Computer Intangible Tangible 70% 30%

Discount

Randal Breaux

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Liquidation Sucks

Randal Breaux

Destroys Value
Emotionally Devastating
The Ultimate Loss

Interception Inside the Five...

Returned for a Touchdown

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

Randal Breaux

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

Randal Breaux

Maybe I should talk to a lawyer.

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

Randal Breaux

Over 80% of a business owner’s wealth is tied to the value of the business.

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

Randal Breaux

Yet they invest more time, money & effort in managing their portfolios than their business value.

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

Randal Breaux

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“You do the math.”

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

“You do the math.”

60% of businesses are rejected 80% up for sale don’t sell 70% of sellers are unhappy 70% next-gen transfers fail

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Why Most Lose

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

“You do the math.”

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The Most Popular Option

Cheap
Easy
No Planning
No Prep

80%

Liquidation Randal Breaux

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Don’t Follow the Herd

Randal Breaux

Not Cheap
Not Easy
Planning
Prep

Liquidation

20%

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Don’t Follow the Herd

Randal Breaux

Not Cheap
Not Easy
Planning
Prep

Liquidation

20%

Plan & prepare in advance to avoid liquidation

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Transition Options:

Choices & Consequences

Randal Breaux

^

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Smart Options

Randal Breaux Liquidation

20% Go Public?

Form of Selling
$20 Million+ EBITDA
$200 Revenue
Other Issues
Not Realistic / Ideal

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Smart Options

Randal Breaux

Sell

 3rd Party  Partner(s)  Management  ESOP  Family

Give Away

 Inter-generational Transfer  Charity

Liquidation

20%

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If you want peace, prepare for war.

Ancient Roman Adage

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If you want peace, prepare for war.

Ancient Roman Adage

An Enduring Company To Sell It

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If you want peace, prepare for war.

Ancient Roman Adage

An Enduring Company To Sell It

Building an enduring company is about maximizing business value.

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Smart Options

Randal Breaux

Sell

 3rd Party  Partner(s)  Management  ESOP  Family

Give Away

 Inter-generational Transfer  Charity

Liquidation

20%

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Smart Options

Randal Breaux

Sell

 3rd Party  Partner(s)  Management  ESOP  Family

Give Away

 Inter-generational Transfer  Charity

Opens up all other options
Takes liquidation off table
Makes time irrelevant
Realizes the highest value

* *

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How Value Works…

Randal Breaux

Value = Profit x Multiple

Performance Desirability

(Usually EBITDA)

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How Value Works…

Randal Breaux

Value = Profit x Multiple

Performance Desirability

(Hard Way) (Easy Way)

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Desirability: Working the Multiple

Randal Breaux

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Desirability: Working the Multiple

Randal Breaux

No Transaction Discount Premium

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Desirability: Working the Multiple

Reliability
Scalability
Transferability

Randal Breaux

Discount Premium No Transaction

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Desirability: Working the Multiple

Reliability
Scalability
Transferability

Randal Breaux

Discount Premium No Transaction

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Case Study: Transferability

Randal Breaux

Oil Refinery Service Firm
Hazardous Waste

Processing

$12 Million Revenue
EBITDA% = 10%

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Case Study: Transferability

Randal Breaux

CEO Doing Invoices
Time Drain
Delays of 2 Weeks
Lost Revenue 1%

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Case Study: Transferability

Randal Breaux

CEO Doing Invoices
Time Drain
Delays of 2 Weeks
Lost Revenue 1%

Solution…

Field Reporting Procedures
Admin Computers &

Networking

Results Logging System
Staff Training

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Case Study: Transferability

Randal Breaux

CEO Doing Invoices
Time Drain
Delays of 2 Weeks
Lost Revenue 1%

Results (90 Days)…

CEO Cut Loose
Invoices in an Hour
Lost Revenue Eliminated

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Case Study: Transferability

Randal Breaux

Working Capital BEFORE AFTER DELTA Revenue 12,000,000 12,000,000 Per Day 32,877 32,877 Days to Bill 14 1 $A/R 460,274 32,877 427,397

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Case Study: Transferability

Randal Breaux

Company Value BEFORE AFTER DELTA Revenue 12,000,000 12,000,000 EBITDA% 10% 11% EBITDA 1,200,000 1,320,000 120,000 Multiple 3.5 3.5 Value 4,200,000 4,620,000 420,000

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Case Study: Transferability

Randal Breaux

Company Value BEFORE AFTER DELTA Revenue 12,000,000 12,000,000 EBITDA% 10% 11% EBITDA 1,200,000 1,320,000 120,000 Multiple 3.5 4.0 Value 4,200,000 5,280,000 1,080,000

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Case Study: Transferability

Randal Breaux

CEO Doing Invoices
Time Drain
Delays of 2 Weeks
Lost Revenue 1%

Results (90 Days)…

CEO Cut Loose
Invoices in an Hour
Lost Revenue Eliminated

SLIDE 54

Case Study: Transferability

Randal Breaux

CEO Doing Invoices
Time Drain
Delays of 2 Weeks
Lost Revenue 1%

Results (90 Days)…

CEO Cut Loose
Invoices in an Hour
Lost Revenue Eliminated

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How Value Works…

Randal Breaux

Value = Profit x Multiple

Performance Desirability

(Hard Way) (Easy Way)

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Keys to Success

Focus on the Multiple
Be Very Specific
Short Time Cycle
Relentless Execution

Randal Breaux

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Summary

Randal Breaux

Family business is a big deal with

distinct issues that deserve attention.

Most family businesses face

liquidation at owner transition.

Beat the odds; build an enduring

company by working on your business value multiple. (Case Study)

SLIDE 58

Don’t Follow the Herd

Odds Against You
Procrastination
Mis-allocation
Self-Delusion

Randal Breaux