As Netflix streaming keeps all of us entertained during the pandemic, we’ve been delighted with reboots and potential reboots of our favorite sitcoms and dramas. We enjoy characters with a sense of nostalgia. The Star Wars franchise stays alive with great stories and satiating curiosity for Luke Skywalker’s back story. It got us thinking, what about a prequel for “The Beverly Hillbillies”?
We can all sing the opening tune, and know that “Pa,” Jed Clampett, went from rags-to-riches by discovering a huge oil pool in the swamp he owned in the hills of the Ozarks. The widower no sooner discovered the “black gold, Texas tea” that he loaded up the truck and moved to Beverly…Hills, that is. However, we want to know who sold Jed that land? They must be kicking themselves.
Did the previous owner know there was oil? Did anyone advise the previous owner to check his land and understand its true value? Was the owner single, or did he/she have dependents that wanted to take over the farm? Could there have been things in place to discover the true value of the land before it was sold, or perhaps streamline the operations of the land for farming to increase its value and make it operationally efficient?
Sadly, it’s a scenario we see play out all the time. Privately-owned companies pondering the “what’s next” for themselves, their families and the business. We’ve done this work enough to know that business owners always think their company is worth more than it is. They believe the potential, but often that potential is not realized. Maybe they are too close to it or they are ready to transition but not Transition-Ready. They don’t see areas to gain operational efficiencies to drive more value because they have always done it a certain way. They don’t look at their business in the eyes of Private Equity or an investor and analyze the business capabilities against current market conditions and opportunities.
Beyond the businesses’ capabilities, there often are complex family issues involved. Complex family issues going unaddressed relative to the business (and family harmony) also get in the way of a Transition-Readiness, a good valuation and operational efficiency. How is this avoided, so you don’t sell the metaphorical land with a pool of oil?
Get good advisors. Simple as that. Privately owned companies are grown by founders that are focused on delivering their goods and services. They often do not have a career of experience and best-practice know-how to navigate the waters of valuation, operational efficiency and Transition-Readiness (the financial, operational and emotional). The well-known quote, “a lawyer who has himself as an attorney has a fool for a client,” also translates well to valuation and business transitions. As hillbilly as Jed Clampett appeared to be, he was good to surround himself with advisors (who could forget Mr. Drysdale, his banker, confidant, and next-door neighbor).
We exist to serve Private Equity looking for the “pool of oil” in the businesses they procure, but more fulfilling is the work we do for privately owned companies, to ensure they are aware they have a “pool of oil” and realize what their business is worth, how to be Transition-Ready and move into a next step that is right for them and their respective families.
In between counseling clients as our day job, we aspire for the Emmy that could be on our shelves (ala the team of Ben Affleck and Matt Damon) for the Prequel of the Hillbillies. We could write it and star as the advisors. A new version of Shark Tank if you will. We know the scenario strikes a nerve for many business owners and we know there is an audience for that!
Want to learn more?
H. Barry Goodman, Birkdale Transition Partners, helps businesses prepare to eventually transition the business and move onto the next stage in their life. Facilitating goals, planning and Transition-Readiness can have a huge impact on the outcome. www.birkdaletransition.com
Tim Van Mieghem, Partner of The ProAction Group, is an operational consultancy that helps companies identify, quantify and mine latent value. He is widely recognized for his expertise in supply chain functions as the author a book (Implementing Supplier Partnerships), presenting at national and local conferences, and creating numerous articles on value creation, sourcing and logistics. www.proactiongroup.com