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Posted: August 20, 2010

Selling your biz: make it a bountiful “Harvest”

Co-owners of business-valuation firm share experiences in new book

Brooke Wylie

David Tolson and Christopher Younger have worked together the past six years, helping business owners lay plans for selling their businesses years before the time to go to market comes.

That experience is reflected in their new book, Harvest: The Definitive Guide to Selling Your Company. Tolson and Younger, co-founders and managing directors for CapitalValue Advisors of Denver, represent middle-market businesses in  the $5 million to $100 million range.

"That range is a great place for us to play, given our experience and background," Tolson said. "We can start working with them to build value two to eight years before they are ready to go to market. I don't think others would look at the selling process that far in advance."

Younger started out as a lawyer and practiced for a few years before joining Expanets, a provider of networked communications and data services serving small to mid-sized businesses, where he took part in 27 acquisitions over a few years and later ended up running the company. The company sold to Avaya in 2003, and Younger, armed with acquisition and operations experience, joined up with Tolson.

Tolson started CapitalValue LLC, a business valuation firm, nine years ago. He soon found himself being approached by previous clients who had received offers from buyers and wanted help negotiating a deal.

"With our ability to understand the risks, we thought we could provide a great way to help business owners get a lot of value," Younger said.

The pair wrote an initial draft of the book in about two weeks, then spent the next two years editing.

"As any writer will tell you, writing the draft was not difficult, but the editing was," Younger said. "Once you get to the sixth or seventh read through ..."

"... Or the 30th," Tolson interjected, "you're pretty much done with it."

The book's chapters, such as Valuation 101, Going to Market -- The Sale Process Overview, and Deal Structure - Making or Breaking the Deal, read like a checklist, concisely steering business owners through the selling process.

"A lot of business owners don't look at it as a process. A lot of them look at it as a reactive event," Tolson said. "We like to say that one buyer isn't really a buyer. When we go to the market we like to have a significant number of interested parties, because for a lot of owners it is as much about the fit as it is the dollars."

Harvest: The Definitive Guide to Selling Your Company, was published in mid-2009, but Younger and Tolson say they have only recently been actively promoting the work.

The opportunity to arm business owners with the tools to drive up the value of their businesses before the selling process begins was part of the motivation for Younger and Tolson to write their book.

"Some value can be driven during the transaction, but a large chunk can be driven beforehand," Younger said. "It takes time, but the business is worth more. There is a set of predicable steps you can take, and we tried to include all of those in the book."

Tolson echoed that sentiment. "With our operational background, we have such deep appreciation for the risks entrepreneurs take. Business owners are extremely smart users of capital. We feel an obligation to guard that capital or more actively deploy that capital and help build value, so they can get the value they want."

"Our goal has been to provide a level of service to entrepreneurs, to all of those folks putting their careers, their income and their families' income on the line, especially with everything that has been going on with the economy," Younger said. "We owe them a debt of gratitude."

Harvest: The Definitive Guide to Selling Your Company is available on www.amazon.com .

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Brooke Wylie is a ColoradoBiz intern.

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Readers Respond

Congrats to David and Christopher for putting their expertise into the form of a book for all entrepreneurs. There are two primary drivers of value for any business: what any given set of buyers perceive as the future economic prospects of the business, what degree of anxiety any given set of buyers would have if the business were sold to one of their competitors. These two components, if well understood by the business owner and her investment banker, can have an immense impact on the spread between the highest offer and the lowest offer for a given business. I look forward to reading this book. Peter CEO, AxialMarket t: @petelehrman By Peter Lehrman on 2010 08 30

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