You’ve heard me talk about my hometown before. Great town, although it’s been a rocky ride lately (you know, with the flood and such). But this small town has had some successes in the last few years – a National Championship basketball team and, heck, this book entitled Harvest. Harvest is a fine piece of work co-authored by a gentlemen who graduated with me from Findlay High School.
So in the interest of full disclosure, you should know that co-author Chris Younger grew up in my neighborhood and was a childhood friend of mine. Chris and his business partner/co-author David Tolson run an investment banking firm in suburban Denver called Capital Value Advisors.
This book spans the process of selling your business, which certainly encapsulates an important part of the services provided by Capital Value Advisors. It begins at the moment you simply contemplate what life would be like if you sold your business and ends at the moment you sign the closing documents. Tolson and Younger touch on everything you need to think about throughout this process. Everything. They go into detail on some things and mention others in summary, making it clear where they expect you, the business owner, to dig deeper. I think they nail the mix of detail and summary, concrete and abstract.
In fact, in terms of balancing weight/length with relevant knowledge, this book excels. It’s less than 200 pages and can be read over the course of a couple of days even by the most harried business owner. But I strongly suggest longer study and quiet contemplation of the content.
The payoff for reading it? I can imagine an immediate boost in confidence for small business owners as they walk into their first meeting to discuss selling their business. And confident they should be. By giving this book the appropriate attention, they’ve taken great measures to guard against any lawyer, accountant, banker, or consultant misleading them on any key aspect of the sale of their business. A confidence borne of knowing that they’re prepared intellectually and emotionally for what could be a long and taxing process.
In my work life, I’m associated with this industry. I’m a numbers guy with a consulting business focused on helping finance organizations in mid-sized enterprises do things faster and more accurately with fewer resources. This book is relevant for me because it clearly links the role of the finance organization to the rest of this process. Tolson and Younger go into a fair amount of detail on valuation, understanding financial statements, and capital structure. By the time any business owner is done reading it, they’re surely going to understand the value of rigorous and regular analysis of financial results.
Besides finance, the book covers other detailed, procedural items like:
- Finding and hiring an advisor
- Preparing the “book” that describes your business
- The process of marketing your business to potential buyers
- The legal document estate
- Due diligence
And finally, Tolson and Younger throw in a wealth of “soft” information, real stories on the strategic and managerial side of things. They have chapters addressing these issues:
- Are you (the owner) ready for this?
- When is the best time to harvest?
- Value outside of the financial statements
- Dealing with deal fatigue
- Communicating to employees and customers
In fact, I just purchased a handful of Harvest to have in hand the next time a client mentions something like, “I will probably want to sell this business someday.” It’s worthy of breaking out just for the glossary and appendices alone. The appendix includes a sample RFP for hiring an investment banker, a sample due diligence list, and an explanation of financial ratios. It’s rich stuff and written to appeal to a generalist.
Besides specific deal issues, I can envision it also being useful as a general reference for a variety of situations where strategy and finance intersect (valuation, performance metrics, and capital structure). Eventually, I’ll be writing more about this over at my business site. That is, when I actually start consistently posting over there.