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The Buyability Toolkit
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2

YOUR IDEAL LIFE

Figure 2.1 Annual Retirement Burn Rate Example

Figure_2.1

Figure 2.2 Magic Number Calculator

Figure_2.2

Calculate your own at: MagicNumberCalculator.com.

3

THE VALUE YOU NEED TO CREATE

Table 3.1 ToolShop Manufacturing Company

Table_3.1

Figure 3.2 How to Calculate Equity Value

Figure_3.2

Table 3.3 Median Deal Multiples by EBITDA Size

Table_3.3

Source: Pepperdine Equity Research Report 2019, Private Capital Markets Project, Graziadio Business School, https://bschool.pepperdine.edu/institutes-centers/centers/applied-research/research/pcmsurvey.

Figure 3.4 The Popularity of Different Valuation Methods

Source: Pepperdine Equity Research Report 2019, Private Capital Markets Project, Graziadio Business School, https://bschool.pepperdine.edu/institutes-centers/centers/applied-research/research/pcmsurvey.

Figure 3.5 Target Equity Value Calculation Example

Figure_3.5

Figure 3.6 The Growth You Need: Compound Annual Growth Rate (CAGR)

Figure_3.6

Figure 3.7 Minimum and Expected Annual Growth Rates for Investee Companies

Figure_3.7

Source: Pepperdine Equity Research Report 2019, Private Capital Markets Project, Graziadio Business School, https://bschool.pepperdine.edu/institutes-centers/centers/applied-research/research/pcmsurvey.

4

THE SEVEN MANAGEMENT CONCEPTS

THREE WAYS TO BUILD A BUSINESS

Figures_3

Approach One: Buy a Franchise

approach_01

Approach Two: Trial and Error on Your Own

Approach Three: Use a Management Blueprint

approach_03

Figure 4.1 The Seven Management Concepts

Figure 4.2 Functional (U-Form) Organizational Chart

Figure_4.2

Figure 4.3 Divisional (M-Form) Organizational Chart

Figure_4.3

Figure 4.4 Maslow’s Expanded Hierarchy of Needs

Figure_4.5
6

HOW MANAGEMENT BLUEPRINTS WORK

Figure 6.1 Gerber’s Organization Chart

Figure_6.1

Source: Michael Gerber, The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It (New York: Harper & Row, 1986), 101.

Figure 6.2 Value Chain Analysis

Figure_6.2

Source: Amanda Athuraliya, https://creately.com/blog/diagrams/what-is-a-strategy-map/.

Figure 6.3 Strategy Map

Figure_6.3

Source: “What Is a Strategy Map?” Visual Paradigm Online, https://online.visual-paradigm.com/knowledge/strategic-map/what-is-strategy-map/.

Figure 6.4 Calculating a 6-Week Rolling Average

Figure_6.4

Source: “Moving Average,” Excel Easy, https://www.excel-easy.com/examples/moving-average.html.

Figure 6.5 How to Document Processes

Figure_6.5

Source: Michael E. Gerber, E-Myth Mastery, p. 262.

7

MASTER THE BASICS

Table 7.1 Simple Annual Budget with Analysis

Figures_7.1

Figure 7.2 Warrillow’s Six Types of Recurring Revenues

Figure_7.2

Source: John Warrillow, The Automatic Customer (New York: Portfolio/Penguin, 2015)

8

ENGINEER VALUE

Figure 8.1 Industries to Avoid: The 10 Fastest-Declining Industries in the US

Figure_8.1

Source: “Industries with the Fastest Growing and Most Rapidly Declining Wage and Salary Employment,” US Bureau of Labor Statistics, last modified September 1, 2020, https://www.bls.gov/emp/tables/industries-fast-grow-decline-employment.htm.

Figure 8.2 Industries to Target: The 10 Fastest-Growing Industries in the US

Figure_8.2

Source: “Industries with the Fastest Growing and Most Rapidly Declining Wage and Salary Employment,” US Bureau of Labor Statistics, last modified September 1, 2020, https://www.bls.gov/emp/tables/industries-fast-grow-decline-employment.htm.

Figure 8.3 Accenture’s Disruptability Index

Figure_8.3

“Disruption Need Not Be an Enigma,” Accenture, February 26, 2018, https://www.accenture.com/_acnmedia/PDF-72/Accenture-Disruptability- Index-POV-Final.pdf.

10

HOW TO CASH IN

Figure 10.1 How a “Self-Buyout” Works

Figures_10.1

Figure 10.2 Cash Out versus Price/Risk Retained

Figures_10.2

Figure 10.3 Basic Structure of an ESOP

Figures_10.3
11

EXECUTE A TRANSACTION

Figure 11.1 The Process of Selling Your Business or Raising Capital

Figures_11.1