Guide
A Succession Planning Guide for Michigan Business Owners
How to prepare, value, and sell the company you built. Fourteen articles by Scott Zack, owner of Creek Equity, in the order an owner needs them.
Why this guide exists
Michigan is in the middle of a generational handoff. Roughly half of the state's business owners are past 55, and most of them have no written plan for what happens to the company when they step back. Many will get their first real education in succession the week a buyer calls, which is the worst possible time to learn it.
I own Creek Equity, a private investment company in Bloomfield Hills that buys and holds Michigan businesses. Over two decades of building and buying companies, I have sat on both sides of the table: as the owner being valued and as the buyer doing the valuing. The articles below are what I would hand a friend who owns a Michigan company and wants to understand the process before it starts. They are written for owners of founder-led and family-owned businesses, generally with $1 million to $10 million of earnings, and for the attorneys, accountants and advisers who work with them.
Read them in order and you will have covered what a good adviser would walk you through in the first several meetings: the paths available, how a buyer sets a price, who the buyers are and what each one wants, and how to sell to the people who already run the company.
Where to start
Five or more years out. Start with Part 1. The decisions you make now about management, customers and clean books are what determine the price later.
A buyer has already called. Go to Part 2 and then Part 3. You need to know how they are valuing you and what kind of buyer they are before you answer.
Your managers want to buy it. Part 4 is written for exactly that situation, including how the financing actually works.
Part 1. Decide where you want to end up
Succession starts with the owner's goals, not the buyer's price. These articles lay out the paths open to a Michigan owner and how to choose among them.
Chapter 1
Michigan Business Succession Planning: An Owner's Guide
Compare exit paths, prepare your company, and plan a transition that protects what you built.
Chapter 2
Business Succession Options for Retiring Owners in Michigan
Family, management, a co-owner, an outside buyer or a long-term investor, compared side by side.
Chapter 3
Selling a Family Business in Michigan: Owner's Guide
How valuation, buyers, taxes, due diligence and succession choices work in a family company, and what to ask before you sell.
Part 2. Understand what the company is worth
Every buyer starts from the same place: the tax return, the add-backs and the risk that the business depends on you. Here is how they get from there to a number.
Chapter 4
How to Value a Small Business: What Buyers Actually Pay For
SDE, EBITDA and market multiples, and how buyers judge owner dependence before they set a price.
Chapter 5
Business Valuation in Michigan: How Buyers Adjust Earnings
How buyers move from the tax return to the earnings figure they actually pay for: add-backs, owner compensation, key-person risk.
Chapter 6
How We Explain a Price to an Owner
When we make an offer, we show the owner how we got there: the earnings figure, the adjustments, the multiple and the terms.
Part 3. Know the buyers
A broker, a competitor, a private equity fund, a family office and a long-term holder will each pay differently and run the company differently afterward.
Chapter 7
How to Sell Your Business in Michigan: Options and Buyers
Brokers, direct buyers and private equity compared, plus how valuation, taxes and closing work.
Chapter 8
Who Buys Businesses in Michigan? 7 Buyer Types Compared
Owner-operators, strategics, private equity, search funds, family offices and long-term buyers: what each one wants.
Chapter 9
Alternatives to Private Equity for Michigan Business Owners
Recaps, minority investors, ESOPs, family offices and long-term capital, compared against a private equity sale.
Chapter 10
Permanent Capital Investors: Who They Are and How They Work
Investors who hold without a fund-life deadline: how they differ from PE funds, the main structures, and what founders should ask.
Part 4. Keep it in the family of people who built it
Selling to the managers or employees who already run the company is often the best outcome for an owner who cares what happens next. The money is the hard part, and it can be solved.
Chapter 11
A Management Buyout in Michigan: How It Works and Is Funded
Who an MBO fits, how it is financed with senior debt and seller notes, and how it compares to a private equity sale.
Chapter 12
Management Buyout Financing: A Michigan Owner's Guide
Senior debt, SBA loans, seller notes, mezzanine and equity, with sample capital stacks for a Michigan MBO.
Chapter 13
How to Sell Your Business to Employees: A Seller's Guide
ESOPs, MBOs and seller notes compared, how to test who can run the company, and how an inside sale stacks up against an outside one.
Chapter 14
How Creek Equity partners with a management team that wants to own the business
When managers want to buy the company they already run, capital is usually the missing piece. Here is how Creek Equity backs them.
More from Scott Zack
Shorter pieces on the same subjects, published on Scott's own sites.
Talk it through
If you own a Michigan business and are thinking about a transition, with or without a buyer in the picture, Creek Equity will have a confidential first conversation with no obligation. Every message is read by Scott Zack.
Scott Zack is the owner of Creek Equity, a private investment company in Bloomfield Hills, Michigan that founds, funds, and acquires businesses. He played forward for the Ohio State men's basketball team and has spent more than two decades building companies in Michigan. Read more about Scott. This guide is general information, not legal, tax or financial advice.