From Private Equity to The Exit Strategy Playbook w/ Adam Coffey

- BRT S03 EP06 (105) 2-6-2022

 

Things We Learned This Week

• Adam Coffey past experience in Private Equity (PE) puts him in a unique position to consult on buying, selling and running business from Purchase to Exit
• Buyer Types – Strategic and Financial -  Light On / Lights Off, what to do with the old business that was bought
• Prepping the Business for Sale – takes 3 years, organization setup, due diligence prep, financial info
• Advisory Team – importance of building a good and experienced team of advisors (CPA, legal, investment banker, consultants), the wrong team could you lots of $
• Sales Process – Mgmt Meetings, due diligence, LOI, NDAs, and more due diligence

 

 

Guest: Adam Coffey, author of The Private Equity & Exit Strategy Playbook

LKIN: https://www.linkedin.com/in/adamecoffey

Website: https://adamecoffey.com/

 

Adam Coffey - CEO, board member, best-selling author, Forbes Business Council member, and an acclaimed guest speaker, Adam Coffey, is an inspiring and authentic leader who creates high-performance cultures and drives transformative growth. 

Over the past 21 years, he has had the honor of serving as President and CEO of three national private equity-backed service companies, each in different industries. Two of the three companies he built achieved enterprise values of $1B. Throughout his career, Coffey has a proven track record of achieving notable outcomes for stakeholders. His career average at exit is 5x MOIC (Multiple of Invested Capital).

Coffey is an active mentor to MBA candidates and is a regular, favorite guest speaker at UCLA. Coffey, who considers himself a blue-collar CEO, has a diverse background. He has led several commercial and industrial service businesses, is a licensed general contractor, a pilot, a former GE executive, an alumnus of the UCLA Anderson Executive Program, and a veteran of the US Army.

Coffey’s first book, The Private Equity Playbook, was released in February 2019 and became an instant #1 Amazon Best Seller and private equity cult classic. His second book, The Exit Strategy Playbook was released in September of 2021 and also was a #1 Amazon Best Seller. He was named one of the “Most Influential Leaders” by the Orange County Business Journal in 2018, 2019 and in 2020 and 2021 was named to their prestigious "OC Top 50". Coffey makes his home in Westlake, TX with his wife and young daughter.

 

Exit Strategy Playbook Notes:

Part One: The Universe of Buyers and Exit Strategies
Analogy is “Lights On or Lights Off?” describing types of buyers like strategic buyers, financial buyers and alternative selling approaches. Some strategic buyers want the business for the tech, talent or intellectual IP. Some buyers want the customers, or geography of the business. Some Strategic buyers may take the talent and IP, and then close the business down over time (lights off), meaning they do not need redundancy like managers or HR, etc. A financial buyer does not work in this industry or have a tem. They would buy the whole business and look to keep the owner, management and tem together to keep running the business (lights on).

Part Two: Prepping Your Business For Sale
You have to prep your business for a sale, think 3 years ahead. You must present your company to various possible buyer groups and be organized. The importance of financial reporting, also includes; outsourcing; legal; serving up EBITDA; cash vs accrual GAAP; how to handle real estate holdings; operations; successor planning; and growth projections.

Part Three: Build Your Advisory Team
Coffey talks about the fact you need strong and experienced advisors in the sale process to prep for  the qualified buyer. He means tax advisors and accountants; lawyers; and a broker like an investment bankers/transaction advisor. He reviews costs, timelines and where each assists a seller. If you do not have a good team, the buyer could take advantage of you (especially if they are experienced), and the costs could be hundreds of thousands to millions $.

Part Four: The Sales Process
How the process actually works from management meetings to the transfer of the business post sale. Selling a business is like a second job, you still run your company and need to maintain profits while meeting with buyers and advisors. There are different type of buyers and you need to determine the real buyer interest. You ramp up the process with the hot buyers and cool the process with lesser buyers. A good investment banker can manage the process. There are NDAs, LOI (letter of intent), disclosure of financial info, more due diligence, surprises, initial meetings, then detailed meetings. Thru the whole process the seller must be on his A Game.

 

Clip from Adam Coffey 8/2020 Guest Appearance on Private Equity:

https://brt-show.libsyn.com/brt-ep-30-8-30-20-the-private-equity-playbook

Peak behind the curtain of Private Equity, and learn how companies are bought, managed, financed, plus what metrics (EBITDA) are used for valuation. Unique perspective from someone who has run companies for PE Firms for the last 20 years. Learn the secrets, and why Execs at companies should consider working or selling to a PE Firm.

 

 

Private Equity Topic: https://brt-show.libsyn.com/category/Private+Equity-Valuation-MandA-Franchise-Business+Broker 

Investing Topic: https://brt-show.libsyn.com/category/Investing-Stocks-Bonds-Retirement

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