Put The Power of XPX Membership to Work For You - and Your Clients

The Exit Planning Exchange –  XPX Greater Boston Chapter is a community of trusted advisors that collaborate to help their private company clients build business value, transfer ownership and create a legacy of success in their lives and their communities.

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XPX Greater Boston

Why Greater Boston?

XPX Greater Boston offers a welcoming membership combined with the high-level programming content to keep you at the top of your game and the unique networking events to grow your resources, all with the goal of providing the best possible outcomes for your clients. XPX Greater Boston members honor the Advisor Principals of the organization and tailor the membership experience to enhance the value that advisors can add when planning for business legacy, growth, and transfer events. As an XPXGB member you will be among the finest M&A and succession planning professionals in New England.

Greater Boston 2024 Summit Highlights

On May 14th, we had an incredible day of learning and networking at our sold-out 2024 Summit at Nutter in Boston! For this year’s event, we decided to pursue a series of intimate interviews and talks that provide different perspectives on the overall theme, “Helping Advisors Engage Better – Acquiring and Retaining Clients.” Our audience of over 160 advisors learned about why business leaders hire or fire you, about key technologies useful for today and tomorrow, about softer skills that are critical to engagement success, about advisors transitioning their practices and about the current economic landscape.

View the 2024 Summit Page

View Louis Cortes’ Presentation on AI

New Emerging Professionals Membership

  • XPX Greater Boston has designed a special membership category for the next generation of exit planning professionals. Specific programming is designed with Emerging Professional member (EP) interests in mind and these events facilitate education and relationship building among peers as well as more experienced members.
  • Eligibility for EP membership: at time of application the prospective member must be ≤ 40 years old or have ˂ 3 years of exit planning experience. Regardless of age, an emerging professional membership is non-renewable and is for a duration of three consecutive years. Special discounted pricing is offered to EP members.
  • EP membership is for 3 consecutive years for price of $595. 
  • All EP members have same privileges of all members and can attend all events or functions.
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The Latest News – XPX Greater Boston

Latest – XPX Greater Boston

When it comes to business valuation, “it depends” is the honest answer to the question, what is the median for small business (sorry, I hate the answer too). Why? Let’s say you own a construction business doing $5 million/year in revenues and $500,000 in EBITDA (profits), or about 10% of revenues. Because construction businesses can range from $0 to $billions, valuation tracking databases have to set parameters. Databases will report multiples to get a value for smaller construction businesses, but the RANGE might look like this: 3.23x for 25th percentile 5.23x median 12.65x for 75th percentile However it really depends on the nature of the businesses selected to generate the range. If an advisor chooses large businesses, the range could be as follows: 8x for 25th percentile 12x median 20x for 75th percentile If you are the owner of the $5 million construction business with $500,000 profits, you may want a value of 20x profits, but you are likely to be disappointed. Even with the smaller range, the 75th percentile probably means companies at $15 million in revenues and 15% profits. So business owners: you need to ask about the range of value for the higher and lower percentiles, to get a fair judge of value. I can assure you that buyers (and their bankers) who use these same databases, will ask about the range. _____________________________ If you’d like to think more deeply about your business, try the LEARN MORE

The sale of a business marks a major life event. It’s emotional, stressful, and exciting all at the same time. And unfortunately, it’s often a lot of work. Most business owners will only experience the process of selling a business once in their life. This is both good and bad news. On the bright side, you only need to get through it once. But many business owners aren’t ready for the process and risk leaving money on the table as a result. With many sellers relying on the sale to fund their retirement and lifelong financial goals, getting it right from the start is critical. Here are tips from sell-side business advisors on what to do (and not do) when selling a business. What to do (and not do) when selling a business Start thinking about selling your business early — really early One of the top mistakes sellers make when selling their business is not starting the process early enough. There are many reasons starting last minute can really hurt your bottom line. It’s not uncommon for business owners to assume they’ll never retire at some point during their life. But as often happens, life changes. Perhaps health concerns for you or a spouse make continuing to run your business difficult. Or maybe you eventually lose the excitement when getting up every day and want a change of pace. Sudden sales or immediate retirements Unfortunately, when business owners want to sell with a tight timeline (or fire sale), they may have fewer options to exit. It’s not uncommon for some buyers to want the owner and/or members of the management team to stay on for a period to help with the transition. If there’s an earn-out, it’ll usually require the seller to stick with the company for different milestones (time, financial, or otherwise) to earn the full purchase price. Earn-outs aren’t ideal for sellers, but if you’re unwilling or unable to consider deals with any continuation component, it could impact the sale price, timeline to find a buyer, or both. Make your business more sellable later by getting advice now Business brokers often recommend getting a valuation done years before expecting to sell the company. Sarah Grossman, Principal of BayState Business Brokers in Needham, MA, says this helps sellers “shape their timeline and any financial planning that needs to be completed prior to a sale.” Understanding the fair market value of the company is critical to setting expectations for the seller, but understanding the drivers of the valuation can help increase the sale price over time. Grossman says, “a [business] broker can advise them on things they can do in their business over the next few years to make it more saleable when it does go on the market.” How to maximize your cash at closing Aaron Naisbitt, Managing Director at Dunn Rush & Co, an investment bank focused on sell-side M&A in Boston, MA, emphasizes the importance of going to market and knowing what your business is worth. He says, “the biggest mistake many businesses owners make is not running a competitive process when the business is capable of attracting interest from a broad number of buyers. This mistake most often occurs when the owner has already made the second biggest mistake – not taking the time to educate themselves and prepare adequately for the process.” Not every business will be able to run a competitive process. But those that can, and don’t, “Will leave money and terms on the table if they do not do so” he adds. Getting professional help is key here as trying to negotiate a sale directly with a buyer might be short-sighted. Grossman says it’s not uncommon for sellers to be approached directly by competitors. She cautions sellers considering working with buyers directly as “They could be leaving significant money on the table without a clear understanding of the valuation of their company. Sellers also need to work with a broker and their advisors to understand a typical deal structure so that they can maximize their cash at closing.” The importance of understanding the terms of the deal cannot be overstated. This is where money is made or lost. Naisbitt cautions that sometimes terms can sound really good, but aren’t always common sense. He adds that without an advisor, sellers “Don’t know where to argue.” During negotiations, you have to consider “What is it that’s important to you and what are you willing to give up” he says. Exit planning is not time to DIY — assemble your team of advisors When selling a company, gathering your team of advisors early on is key to getting a successful outcome. Again, odds are you haven’t sold a business before and probably won’t again. We don’t know what we don’t know…and you only have one shot to get this right. Your team of business and personal advisors will be instrumental in getting the deal over the finish line. Your business advisory team may consist of: a business broker or M&A advisor, accounting and tax advisors, and transaction/M&A attorney. On the personal side, your sudden wealth advisor who focuses on helping individuals experiencing a transformative liquidity event. Be sure to involve your wealth advisor in discussions around deal terms too. For example, when considering deal structure, it’s important to ensure alignment with your objectives or financial needs. What are your income needs after the sale or do you have plans for a big purchase? Your advisor can help determine how much cash you need at closing and whether to consider the pros and cons of arrangements like an installment sale. And at closing, a financial advisor can help you determine Section 1202, realizing the gain over time with an installment sale, asset versus stock purchase, or state tax implications such as the charitable goals, legacy objectives for heirs, or estate tax planning strategies. Brokers explain what sellers are most unprepared for during the process Selling a business is a lot of work. In addition to running the company in the usual course of business, sellers also need to comply with a host of due diligence requests from the buyer’s team and the lender financing the transaction. The magnitude of this process is by far the most 

Starting with the End in Mind – webinar for business owners and buyers May 16 at 1PM (EDT) If you have the following questions, this webinar is for you! How do I strategically think about my end game? In other words, how do I figure out what game I am playing? What makes a business hard to sell and limited in market value? What are some major value enhancement strategies available to my business? What are reasonable timeline considerations in growing, preparing, and selling my business and what capacity needs are required to be added? How do I build a team of advisors? Speakers include: Amanda A. Russo: CEO of Cornerstone Paradigm Consulting Ryan Goral: CEO of Gspire Group Paul Cronin: three-time founder and M&A Advisor at True North Advisors Group For event details and registration, click

The other day, a marketing expert asked me for “a hook” to explain what I do. I replied, “I sell smaller companies to larger companies, I am an M&A Advisor”. The truth is that I often say no to a lot of owners who ask me to sell their business, or hear no from a lot of buyers who take a look at my clients. So painful. You see, many business owners are really accidental entrepreneurs. If you are a business owner, maybe you got good at something working for someone else. Then you got ticked off at your boss, or the company goes out of business (because THAT owner failed to build business value), and someone hires you to do a job. That job turns into two, then 10, then 50, and so on. Before you know it, you have to hire employees (ugh), and you have a business. You work every day – Sundays too. 60, 80, 100 hours a week. Skip vacations. Miss your kids’ birthdays and soccer games. Whatever it takes. Why, because “no one else can do the job better than you”. 25 years go by and you feel an ache in your back, or your hip, or your head, and you say – “maybe I can sell this thing”. So you ask your CPA for some names of brokers or M&A advisors and make some calls. Then you get stabbed in the heart, when people like me tell you that your business is not really a business – it’s a job with employees, and late invoices. Hard to relive 25 years – isn’t it? If you want to change this outcome – there is hope, BUT it takes time and money to make your business sell-able. It starts by swallowing your pride and doing the work ON your business. You can turn things around over a few years, and come back to me with real profits, proven systems, and a key manager or two that you trust to run the business. That is when I say, “I can sell your business”. And the pain starts to go away. Maybe you even start to smile – again. It can happen, but it’s your choice: “Whatever it takes” or “Whatever happens” Which do you choose? ********************************* If you are a business owner who’d like to think more deeply about your business, try the

I get this question a lot in M&A. The purchase price of a business can have a number elements: 1. down payment (cash equity from the buyer) 2. bank financing 3. seller’s note 4. installment sale 5. earn-out 6. commissions on future sales 7. consulting agreement for the seller, post-acquisition Earn-out’s, commissions and consulting agreements are often used to “bridge the value gap” between buyer and seller. In some cases, an earn-out is prohibited (SBA loans usually do so), or impractical. So, a consulting agreement can help. Let’s say you own a business and the buyer offer’s $1 million, but you think the business is worth $1.2 million based on growth potential with a new customer coming in. The buyer thinks there is downside risk that customers may leave, once you (the seller) leaves. One solution is where you and the buyer to agree to the $1.2 million purchase price contingent on the terms of the consulting agreement: $200k cash $800k bank loan $200k consulting agreement that might look like this: If the revenues stay at 100% to 90% of the current year (the base year), you earn $200k. If they fall 89% to 80%, you earn $150k, and follow a similar “ladder”. If the new contract yields at least a 10% increase in the base year, you (the seller) gain 20% of the profits from that new customer. This presents a win-win scenario for buyer and seller, and usually works with many lenders.

That is a question many businesses have faced over the years. Today, there are businesses that saw big increases in sales during the early days of the pandemic (2020 – 2021), but 2022 softened and 2023 seems kind of flat. This is especially true in many retail businesses “selling things”. Why? Because many consumers switched to buying services (travel, etc.), after redecorating their house, or buying power sports equipment, etc. Since leisure travel is almost back to 2019 levels, and inflation surged (at least for a while), there is only so much money to go around. As a business owner who wants to sell in such a scenario, you have to show financials from 2018 to 2022, and then estimate 2023 and 2024. If you can show that overall business growth from 2018 to now, then buyers may see this sales dip as part of the normal business cycle. That said, as a seller, you should be prepared for a price that reflects the business as it is, not what it was in 2020-2021. You also may see buyers put earn-outs into their offers, that are based on your forecast for 2024 and 2025. This give your the opportunity to get more money over the next year or two, versus what you may get at the closing table. So the answer to my question is “yes”, you can sell a business when sales take a dip, but you have to be flexible and show that there are growth opportunities for the buyer.

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