MarketView Insights: Navigating Macroeconomic Headwinds

Over 50% of attempted business sales and capital-raising transactions end in failure.

Why?

Because business owners haven’t prepared their businesses, or themselves, for the complex realities of the process.

This monthly newsletter is dedicated to providing you with the objective, practical insights needed to change that statistic for the better. We'll show you the strategies and tools that empower owners to take control of their future.

Whether you’re a business owner considering your next chapter or a trusted advisor guiding clients, you know that selling a business is one of the most significant transactions of a lifetime. Yet, many owners enter this process stressed and unprepared, leaving their most valuable asset to chance.

Let’s start with a case study:

Frank and Sons, Inc: Navigating a Family’s Legacy Under Threat

Frank & Sons, Inc., an 80-year-old family manufacturing business, was a cornerstone of its community. The owner, Robert, had planned to pass the business to his son and daughter, Robert Jr. and Mary, but at the time he chose, a perfect storm of macroeconomic forces had battered the company.

Tariffs: New tariffs on imported raw materials dramatically increased the cost of goods sold, shrinking margins from 18% to just 12%.
Interest Rates: High interest rates made it difficult to finance a necessary capital expenditure for a key piece of machinery.
Inflation: Inflation was eroding the value of the family’s profit and putting pressure on the company to increase wages for its 120 employees, or risk losing them to a competitor.

On the surface, Robert's business still looked profitable, with revenue holding steady at around $22 million. But his heirs, Robert Jr. and Mary, were deeply worried. Their parents were counting on the business to fund their retirement, but they had real concerns about carrying on the legacy in such a hostile economic environment. The thought of selling was filled with emotional stress, with the family divided over whether to sell now or hold on and risk the family's legacy. The family was stuck, feeling immense anxiety, and our MarketView Blueprint was the first step toward getting unstuck.

The Core Problem: A Business Facing an Existential Threat

Frank and Son’s MarketView Blueprint revealed that the business was not just facing external threats, but also internal issues that would significantly diminish its value and prevent the family from receiving a fair price.

Emotional and Family Conflicts: The family was deeply divided over the decision to sell or hold. Robert Sr. was emotionally attached to his father's legacy, while his son and daughter were paralyzed with fear and anxiety. They couldn’t come to a consensus, and their internal conflicts prevented them from objective decision making.
Lack of a Documented Growth Plan: The business had no clear plan to grow its top line and profits, and this was particularly challenging in light of higher cost of goods.
No Post-Exit Plan: Robert and his wife had no clear plan for what they would do after selling the business. They had not articulated their financial needs and Robert had no idea how he would spend his time after exiting the business. This created stress that led to uncertainty for them and the rest of the family,
An Aging Employee Base: The average age of the 120 employees was 55, with many nearing retirement. While this signified loyalty, a buyer would identify this as a risk to a company's future.
Obsolete Technology: Frank & Sons, Inc. was still using an outdated, analog manufacturing process. The company’s competitors had invested in new technology that was 50% more efficient and would allow them to produce a higher quality of goods at a lower cost.

MarketView’s Strategic Recommendations

The MarketView Blueprint is the first step towards taking the emotions out of the situation and giving the family a clear, objective assessment of their options. We were able to get them all on the same page by providing a clear, unbiased assessment of their current value and a strategic roadmap to protect their legacy.

Value Clarity: The first step was to establish the business's true market value using current market data and accepted industry valuation methods. We helped the family understand that, despite the macroeconomic challenges, the business was still a valuable asset. The family learned that the value of their business was based not only on its past, but also on its future potential.
Define the Future: We met with Robert and his family and helped them define their financial and non-financial goals. The family was able to create a clear plan for their post-exit life and a clear vision for the future of the business, which was crucial for them to get on the same page and align on a decision to sell.
Identify Opportunities for Performance Improvements: A new part-time director of sales created and implemented a growth strategy that involved expanding sales of existing products into new geographic markets. At the same time, the COO located several new raw materials suppliers offering higher quality products at a lower cost. This improved profit margins immediately and allowed the company to grow sales by becoming more competitive in existing and new markets.
New Employee Recruitment Plan: With the help of an outside consultant, the company developed a plan to attract and retain a younger, lower cost workforce. Through this effort, the average age was reduced to 47 and labor costs dropped 15%.
New Technology: Despite high interest rates, we identified new tax incentives that would make it feasible for the company to invest in the technology they needed to be competitive with the top performers in the industry.

The Big Decision

The Frank family recognized that regardless of whether they ultimately sell the business, meaningful improvements are essential to protect and enhance the value of Frank and Son’s, Inc. They committed to implementing the outlined changes, continue to operate the business for the next 18 months, and reassess their options at that time. In the interim, Robert Sr. stepped back from his day-to-day responsibilities and to pursue two lifelong dreams: teaching an entrepreneurship course at the local community college and finally learning to play the piano—something he had wanted to do for over 40 years.

A Message for Our Valued Referral Partners

Robert’s story highlights the critical role a pre-transaction advisor plays. As a CPA, attorney, wealth manager, or consultant, you’re often in the best position to identify when a client is unprepared to make the difficult decision whether to sell or retain ownership of their business.

Engaging MarketView early not only protects and promotes your client’s value but also increases the certainty that they will have a successful exit.

Remember: Successful business sales don’t just happen—they’re the result of smart, deliberate preparation.

Ready to Create Your Business’s Blueprint for Success?

Don’t let emotions or a lack of planning jeopardize the business you’ve worked so hard to build. The MarketView Blueprint equips you with a clear, objective strategy to protect and increase your company’s value, increase its salability, and position you for a successful sale or capital raise.

Jay Carter

CEO, MarketView

jcarter@market-view.com

704-904-7543