We are beset by rules of thumb.
Here are two which few would argue with:
- There are some big corporations, and even big private businesses sloshing around with cash right now.
- Times are tough.
Do the cash flush pay out dividends? They could, and the shareholders could take their money and invest somewhere else. For some, it means a time of shareholder boasting as that shiny red car is bought, to be admired by friends and colleagues.
More likely in the astute business environment, is that the excess money is used to ramp up capacity in the business for the good times which will certainly follow. This can be done by way of training employees, but even that usually follows planning for the acquisition of bigger, better and braver equipment. When production starts to pick up, so existing and new employees can be trained on the new equipment.
Another option is for the cash flush to start “dating” the cash starved within their own industries or perhaps in complementary supply chain businesses, on their own terms. They look for businesses with growth potential, but which simply do not have the resources to grow any further under current constraints, or which have screwed up their cash flow recently, or who have starved themselves of further lines of credit, or which need restructuring, or which need experienced management.
Ashley Madison and Tinder aside, we have been acting as match makers in recent times between the rich and the prospectfully {made up word} future rich. Some exciting deals are in the pipeline.
These big brother investors are able to offer so many of the talents which are often lacking in growing businesses, and of course chief amongst them is cash for growth. While this may seem like a bit of a liberty to the business owner who has got his business this far, the additional talent can have far reaching consequences for the future prospects of the owner.
Let me explain.
In days gone by, the owner wanted “to sell my business”. This progressed to him wanting “to get out”. The euphemism is now “exit”, and its more laborious “exit plan”.
Investors with an agenda understand the concept of “plan” in the “exit plan” colloquialism. Often we are told by business owners that when the buyer comes along, “he must just come with cash”. The problem with this approach is that it is aiming to remove all future risk from the seller, and transfer it to the buyer, and significantly so. The result is a poor sale.
How is this for an alternative: A part sale, accompanied by significant investment in terms of money, talent, resources, connections and synergies. This is soon followed by significant growth with resources. Under the auspices of a well designed agreement, the owner is able to exit the balance of his shares only a few years later, with the remainder of his shares worth a heck of a lot more (per share) than they were originally. Significantly more!
Who would not want to do it this way? And why not?
You are where you are because you have pushed darn hard to get here. What if you were given a good healthy kick in the bum to get you really rocking and rolling for a few years?
You know… because getting here has not always been conducive to saving for retirement, the next project, or a better life. Here is your chance for growth.