Five Ways Attorneys Help Business Owners Through a Sale

Business Person

DWH and Adamy Valuation began a series called “Tactical Tuesdays” in 2020 in response to the impact of the COVID-19 pandemic on our clients and business partners. The goal of “Tactical Tuesdays” was to provide up-to-date information that would allow leaders to make tactical decisions to run their business. As COVID (hopefully) winds down, the Tactical Tuesdays focus is shifting to address longer-term issues. Over the next several weeks, DWH and Adamy will be publishing a series of blog posts around exit planning for business owners.

As we have covered in previous articles in this Tactical Tuesday Exit Planning Series, having an experienced team of advisors is critical to the sale process for any business owner.  Let’s look more closely at the role a mergers and acquisitions (“M&A”) attorney can play in the process.  Here are five ways an M&A attorney can help business owners before and during the sale of a business.

    • Prepare the Company

A good M&A attorney will assist business owners with reviewing their legal documents before beginning the sale process.  The attorney will review ownership documents, leases, employment contracts for key employees, customer contracts, and other key legal agreements.  This prevents the business from getting into the sale process and finding out a critical document is missing or has been misrepresented, which can impact the sale price or even end the sale entirely.

    • Present Pros and Cons

During the sale process, owners will see many options for deal structures.  M&A attorneys have experience with these structures and can advise business owners of the pros and cons of each type.  This is very important when an owner is comparing offers with different proposed structures or financing terms.

    • Mitigate Tax Issues

Similar to #2, M&A attorneys have experience working with CPA firms or tax attorneys on setting-up the most tax-efficient structure for sellers.  Many business owners focus on the offer price, but all offers should be evaluated on an after-tax basis.  The attorney will work with the business owner’s CPA or tax attorney to determine this.

    • Protect the Owner

Purchase agreements generally require the owner to agree to certain representations and warranties.  Purchase agreements and representations and warranties are legal agreements designed to protect the buyer from things not found in due diligence, such as undisclosed lawsuits or environmental issues, but can create risk for the seller.  M&A attorneys assist owners in negotiating reasonable representations and warranties that can protect the buyer but not create unnecessary risk to the seller.

    • Advise and Advocate

M&A attorneys work on the sale and purchase of businesses all the time; it’s their job.  As a result, they have the skills and experience to provide practical advice to business owners and serve as a trusted advisor and advocate during the transaction process.  “An experienced M&A attorney brings their personal M&A experience, and the experience of their firm, to bear on the transaction,” says Jon Siebers, Business Practice Group Chair at Rhoades McKee, in Grand Rapids, MI.  “This allows the attorney to quickly advise the client on the best solution to the problem they are facing in a transaction.”

M&A attorneys play a critical role in the sale process of any business.  Business owners must take the time to find an attorney that has extensive experience, particularly with the type of sale the owner is contemplating.  This will ensure that the owner has a qualified advocate to guide them through the sale process.

Key Takeaways

  • Having an experienced team of advisors is critical to the sale process for business owners.
  • M&A attorneys play an important role in preparing the company for sale, presenting pros and cons of deal structures, mitigating tax issues, protecting the owner, and advising and advocating for the owner during the process.
  • Owners should make sure that their attorney has experience advising on similar types of transactions before engaging them.

The Complete (6 part) Exit Planning Series

Part 1: Are you Ready to Make an Ownership Transition?

Part 2: Preparing for the Future: Understanding the Value of Your Business

Part 3: Proactive Estate Planning When Preparing a Business for Sale

Part 4: Exit Options for Business Owners

Part 5: Should you Establish and ESOP at Your Company?

Part 6: Five Ways Attorneys Help Business Owners Through a Sale

Written By:

Our Team                    

Ben Borisch, COO, Partner, DWH | LinkedIn


Our Team

Monica King, (former CEO), Managing Partner, DWH | LinkedIn

Should You Establish an ESOP at Your Company?

Business person

Exit Planning Series
Should You Establish an ESOP at Your Company?


DWH and Adamy Valuation began a series called “Tactical Tuesdays” in 2020 in response to the impact of the COVID-19 pandemic on our clients and business partners. The goal of “Tactical Tuesdays” was to provide up-to-date information that would allow leaders to make tactical decisions to run their business. As COVID (hopefully) winds down, the Tactical Tuesdays focus is shifting to address longer-term issues. Over the next several weeks, DWH and Adamy will be publishing a series of blog posts around exit planning for business owners.

Federal legislation in the 1970s paved the way for Employee Stock Ownership Plans (ESOPs), giving business owners a tax-advantaged way to share broad ownership with employees. ESOPs are one of the most popular vehicles for sharing company ownership with employees. Unlike management incentive plans, ESOPs are designed to provide broad-based ownership to employees at all levels in a company.

In this post, we provide a high-level overview of the benefits of ESOPs as well as important considerations. There may be exceptions to any of these provisions in certain situations or for specific company types – for example, with C-Corporations or S-Corporations. As with any important business ownership decision, owners should consult with qualified attorneys and financial advisors on options and requirements related to ESOP structure, operation, governance, valuation, tax treatment, and other important technical details.

What’s in it for Owners?

Unlike most other exit options, an ESOP provides owners with the flexibility to control the amount and timing of the sale of their company stock. It can also be done independent of the timeline for leadership transition plans, meaning the owner doesn’t have to retire and sell the company at the same time. Many owners are also attracted to an ESOP as a way of preserving their legacy and the unique culture they have built as well as ensuring that ownership and jobs remain in the local community.

There are also tax advantages that may be available to the seller when selling to an ESOP. For example, with the right structure, an owner can defer capital gains tax indefinitely. While the tax advantages for owners can be attractive, they are usually “icing on the cake”, rather than the main motivation to sell to an ESOP.

Giving employees a financial ownership stake in the company can incentivize a higher level of employee performance and a deeper, more personal investment in the company’s success. ESOPs also serve as a valued, competitive employee benefit.

Many studies show that companies with ESOPs enjoy relatively higher growth rates and lower employee turnover.

ESOP-owned companies can also enjoy ongoing tax benefits that can improve cash flow and help finance the ESOP’s purchase of stock.

The most significant tax advantage for ESOP companies is the ability of S-Corporations to shield from federal (and most state) taxes the portion of their profits represented by the ESOP.  When the ESOP owns 100% of a company’s stock, there is no federal tax liability for the company’s earnings.

In addition, there are other ongoing tax deductions available to ESOPs, even when the ESOP owns less than 100%.

What’s in it for Employees?

For employees, ESOPs serve as both a retirement plan (similar to a 401(k), only invested in employer stock) and an opportunity to share in the collective success of their company. With very rare exceptions, employees cannot buy shares themselves; they are allocated and granted by the company. This means that employees earn ESOP stock without putting any of their own funds into the plan.

Employees earn ESOP shares in direct proportion to compensation (just like a profit-sharing contribution). Plans typically have eligibility and vesting requirements.

As with other qualified retirement plans, employees are not taxed on their company’s contributions to their ESOP accounts. When an employee retires, the company must buy back their shares at fair market value – a distribution from the plan.

If the employee leaves before retirement age, they can rollover the proceeds to another qualifying plan. As with IRAs and 401(k)s, early withdrawals that are not rolled over are subject to taxes and penalties.

Other Considerations

ESOPs are best suited for companies with consistent cash flow, reasonable visibility to future performance, market values above $10 million, a minimum of 40 employees, and borrowing capacity if the owner desires liquidity.  As with any exit, owners and advisors should evaluate the impact of an ESOP on the company’s future cash flows and ability to service any new debt or financial obligations created by the ESOP transaction.

As owners consider establishing an ESOP, they should have a realistic understanding of the costs and obligations that come with an ESOP.

ESOPs can be complicated, so they require support from qualified professionals. This also means there is meaningful cost in establishing and maintaining an ESOP.  The costs of implementing an ESOP are similar to the costs of selling a company with a full team of advisors. Implementing an ESOP is a 3-to-6 month process with appropriate planning and the right team of advisors.

ESOPs are regulated by the Department of Labor and the IRS. That means an ESOP requires additional compliance and the potential for government scrutiny, regulatory action, and litigation.

ESOPs are not for everyone. In particular, for the seller who needs to extract top dollar for their business, an ESOP is not the right fit. But, for owners who are focused on their legacy, employees, and local communities, an ESOP can be a great path to exit and a fantastic benefit for employees.

With the right professionals on the team, an ESOP can be implemented and maintained to create value for a large group of stakeholders.

Additional Reading

Determining if You are Ready to Sell – Tactical Tuesdays | Exit Planning Series

Understanding the Value of Your Business – Tactical Tuesdays | Exit Planning Series

Transition Before Transaction in Family BusinessDWH | Blog

Exit Options for Business Owners – Tactical Tuesdays | Exit Planning

Written By:


Nick Adamy, Managing Director, Adamy Valuation | LinkedIn

Exit Options for Business Owners

Exit Planning Series
Exit Options for Business Owners


DWH and Adamy Valuation began a series called “Tactical Tuesdays” in 2020 in response to the impact of the COVID-19 pandemic on our clients and business partners. The goal of “Tactical Tuesdays” was to provide up-to-date information that would allow leaders to make tactical decisions to run their business. As COVID (hopefully) winds down, the Tactical Tuesdays focus is shifting to address longer-term issues. Over the next several weeks, DWH and Adamy will be publishing a series of blog posts around exit planning for business owners.

Business owners who are seeking to sell all or a part of their business have options available to them both inside and outside of their company.  Owners should keep in mind how each option will impact their ability to sell all or part of their business, how long a transaction might take, the impact on their business after the sale, and the value they will get through the transaction.

Internal Exit Options
Family owned or closely held businesses often place a high value on keeping the business in the family.  There are several options for businesses considering this path.

Family Succession – Transitioning the business to a family member can be an attractive option because the process can be more flexible as to the structure and timing.  The seller and buyer should closely evaluate how much of the transaction will be funded with equity and how much with debt (external or seller’s note) and how that will impact the future cash flows of the business.

Sale to Management – Often a key member of the management team will want to buy the company using a “Leveraged Buyout” or LBO.  This purchase can be financed with traditional debt, seller’s note, or a combination of the two.  These transactions can offer favorable terms and flexible timing to the seller.  However, the seller should carefully consider the impact of this debt on the future cash flows of the business.

Employee Stock Option Plan (ESOP) – Sometimes owners wish to sell the company to the employees of the company and may opt to use an employee benefit plan and trust to hold and allocate shares to employees. (Adamy will cover this option in more detail in our next blog post.)

In all cases, there should be a focus on the impact of the transaction on debt and cash flow, especially if the buyer intends to use external financing.  Doug Holtrop, Senior Vice President, Corporate Banking, of Mercantile Bank, explains, “When looking at funding the purchase of a business by a family member or member of the management team, the bank will want to make sure the business can generate a level of cash flow that allows it to service the debt created by the purchase along with a margin for volatility in future earnings.”

External Exit Options

Business owners who do not see an internal exit as an option have external options for an exit.

Strategic Buyers – Strategic buyers may work in the same industry as the seller’s company, such as a supplier, customer, or competitor.  They may offer a higher valuation and often better understand the seller’s company or industry, offer opportunities to grow the company after the sale, and/or may maintain ownership for a longer period.

Private Equity (“PE”) – PE funds are groups of individual and institutional investors that invest capital for a specified period before the fund is expected to sell its holding and return money to the investors.  PE can move quickly on transactions.  “PE can be a great option for business owners who aren’t ready to fully exit and are looking for a partner to help them grow their business.  Choosing the right equity partner can not only bring capital to the table, but also an entire toolbox of business best practices that can assist an entrepreneur in taking their business to the next level.” says John Pollock, Managing Director of LV2 Equity Partners, a private equity group based in Grand Rapids, MI.  One important thing to note is that PE funds often require sellers to maintain (or “roll over”) a portion of their ownership.

Tribal Economic Development Companies (“EDC”) –Native American Tribes have become more active investors over the last decade.  EDCs invest directly into companies, typically acquiring the entire company or majority ownership for a very long-term hold. Tribal EDCs may invest in operating companies, real estate, and/or provide passive capital.  For example, Waseyabek Development Company, an EDC in Grand Rapids, Michigan that manages the Nottawaseppi Huron Band of the Potawatomi’s non-gaming economic development activities invests in companies with intent to hold for seven generations.

Special Purpose Acquisition Company (SPAC) – SPACs companies are formed for the sole purpose of acquiring a company.  That company might be known when the SPAC is formed, or the SPAC might be allowed to pursue a “yet-to-be-determined” company.  SPACs can offer a higher purchase price to a seller, can close quickly, and often bring more equity to the transaction (less debt).  There are significant regulatory requirements that come with a SPAC.

In all cases, owners should work with their advisors to evaluate their goals in selling and then develop a plan to target buyers that will allow them to achieve those goals.

Key Takeaways

  • Business owners have options for exiting their businesses, both internally and externally.
  • Owners should understand how the type of buyer impacts timing, structure, financing, value, and the company performance after the sale.
  • Owners should determine their goals in a transaction to help them choose which type(s) of buyers might be the most suitable.
  • Owners should have an experienced team of advisors to assist in the transition.

Additional Reading

Determining if You are Ready to Sell – Tactical Tuesdays | Exit Planning Series

Understanding the Value of Your Business – Tactical Tuesdays | Exit Planning Series

Transition Before Transaction in Family BusinessDWH | Blog

When to Buy, When to Sell: An Independent Look at Your Most Important DecisionTactical Tuesdays | (

Written By:

Our Team                    

Ben Borisch, COO, Partner, DWH | LinkedIn


Our Team

Monica King, (former CEO), Managing Partner, DWH | LinkedIn


Proactive Estate Planning When Preparing a Business for Sale

Doug Wilterdink

Exit Planning Series
Proactive Estate Planning When Preparing a Business for Sale


DWH and Adamy Valuation began a series called “Tactical Tuesdays” in 2020 in response to the impact of the COVID-19 pandemic on our clients and business partners. The goal of “Tactical Tuesdays” was to provide up-to-date information that would allow leaders to make tactical decisions to run their business. As COVID (hopefully) winds down, the Tactical Tuesdays focus is shifting to address longer-term issues. Over the next several weeks, DWH and Adamy will be publishing a series of blog posts around exit planning for business owners.

Estate planning and exit planning generally share common goals around financial security, tax minimization, and providing for people, so it is essential for these two plans to complement one another. Estate planning takes time.  Business owners who begin their estate planning as early as possible in the exit planning process will enjoy a greater selection of strategies to deploy.

Preparing for an exit involves thoughtful planning inside the business and planning for life events outside the business. A Mercer Capital statistic estimated that business owners may have 80% of their net worth in the value of their business, highlighting the importance of understanding the value of the business owner’s most valuable asset. We previously discussed the importance of preparing for the future by understanding the value of your business.

Become Informed and Understand Options

A business valuation allows business owners, along with their advisors, to plan for an exit with realistic expectations around sale outcomes and potential proceeds. This foresight supports estate and exit planning in a few ways:

  • Highlights which exit strategies are most likely to support the seller’s primary goals (we will address internal and external exit options in future articles).
  • Enables informed financial planning decisions for the selling business owner and their family.
  • Empowers the exiting business owner to make proactive plans to deploy tax-advantaged strategies that support gifting and/or philanthropic goals.

Revisit Estate Plans

Business owners who are contemplating a sale in the near to mid-term can enhance their preparation by revisiting existing estate plans. Estate Planning Attorney Lynwood VandenBosch with Foster Swift Collins & Smith PC advises,

“In this context, updating an estate plan involves more than updating a will or trust. A business exit needs to fit within the broader context of a business owner’s personal objectives, both during life and after death. Properly structured, the estate plan creates an efficient, effective pathway for fulfillment of many of the most important of these objectives, and both affects and is affected by every aspect of the exit process.”

The Biden Administration’s proposals to reduce the lifetime gifting exemption, increase the top rate for estate taxes, and possibly eliminate the step-up in basis for inherited property, elevate the priority for business owners to re-assess their estate plans. With uncertainty around the timing of potential policy changes, business owners are giving more thought to accelerating their exit plans to take advantage of the current tax regime before it is replaced. Additionally, many attorneys are exploring creative strategies with business owners to hedge the concern of a change in tax policy implemented retroactively to the beginning of the year.

Execution and Philanthropic Considerations

For many business owners, once financial plans are established to provide financial security and accomplish wealth transfer goals within the family, looking outward with a philanthropic lens provides a sense of meaning and purpose.

Jamie Kuiper, President of National Christian Foundation’s West Michigan region, highlights the importance of proactive planning,

“Early planning may allow business owners to increase their charitable giving by as much as 25%.  This is not just great news for the business owner; it is great news for the causes they care about.  However, once the sale is complete, these unique planning opportunities are generally lost, so advance planning is critical.”

Donor Advised Funds are a popular tax-advantaged vehicle for giving, which provide the donor control over the direction of the donated funds. This process allows for shares to be donated just prior to a sale of the business which creates an income tax deduction for the donor based on the fair market value of the gift and reduces the capital gains tax liability at the time of a sale. Other planning options also exist, such as Charitable Remainder Unitrusts and Charitable Lead Annuity Trusts, which is why it is important to discuss optimal solutions with your attorney, CPA, and other advisors ahead of a sale to determine the optimal design and timing for your circumstances.

Proactive estate planning ahead of a sale ensures you can structure your exit and estate plans to achieve your goals in the most tax-advantaged way.

Additional Resources:

Determining if You are Ready to Sell

Understanding the Value of Your Business

There May Never Be A Better Time to Transfer Wealth to Your Kids – But is it the Best Thing for Your Family?

Written By:


Liz Briggson, Manager, Adamy Valuation | LinkedIn


Kaylee Simerson, Manager, Adamy Valuation | LinkedIn

Preparing for the Future: Understanding the Value of Your Business

Exit Planning Series
Preparing for the Future: Understanding the Value of your Business


DWH and Adamy Valuation began a series called “Tactical Tuesdays” in 2020 in response to the impact of the COVID-19 pandemic on our clients and business partners. The goal of “Tactical Tuesdays” was to provide up-to-date information that would allow leaders to make tactical decisions to run their business. As COVID (hopefully) winds down, the Tactical Tuesdays focus is shifting to address longer-term issues. Over the next several weeks, DWH and Adamy will be publishing a series of blog posts around exit planning for business owners.

Organizational planning is foundational to achieving sustainability and long-term success. A business valuation can support this initiative by defining objectives and identifying key strengths, areas for improvement, and meaningful opportunities.

Matt Bakker, President of Landscape Design Services, obtained a business valuation from Adamy Valuation for his family-owned business and provided the following feedback:

“Even if you are not planning on selling your company, the things that make a company more valuable to a potential buyer make the company more valuable to the current owners. The process of obtaining a business valuation helped us to identify key value drivers and to focus on how we can improve the value of our company to our family shareholders.”

So how does one determine the value of a business? The qualitative and quantitative process of business valuation provides the answer. Cash flow, comparable business sales, and asset values are the most common approaches to deriving business value.

Cash Flow

The worth of a business can be measured by the present value of its future cash flows. We call this the income approach. Often, a financial forecast is developed over a finite period and extrapolated into the future. A discount rate is then applied to arrive at a price an investor would pay today for the asset.

Intuitively, investors will demand a higher discount rate, or rate of return, for a riskier asset. Building a discount rate involves qualitative considerations such as management team strength and quantitative measures such as historical stock market returns. Rates of return and value hold an inverse relationship (i.e., a higher discount rate leads to a lower valuation, all else equal).  Therefore it is important for business owners to use the valuation to identify areas of risk and ways to proactively mitigate those risks.

Comparable Business Sales

Much like real estate appraisers, business valuation professionals must pose the following question: “What are investors paying for a similar asset?” By analyzing businesses that have previously transacted, sales and earnings multiples can be extracted to infer the value of our subject business. To accomplish this, valuation professionals must first find businesses that serve similar markets, operate in an aligned industry, and/or have a comparable financial profile, among other considerations.

Asset Values

The asset approach is simply a sum of the parts, such as inventory, equipment, and real estate, after adjusting the reported balance sheet figures to market. While this approach is appropriate for real estate and other investment holding companies, its relevancy for an operating entity is limited to situations where a business is significantly underperforming its full potential.

Understanding Your Financial Position

Many business owners hold a significant portion of their net worth in their business, which should be carefully considered when planning for the future. A business valuation does more than provide a snapshot view of company value. Nick Adamy, Managing Director with Adamy Valuation, echoes Matt Bakker’s sentiments, “The business valuation process can help you maximize value by uncovering key value drivers specific to your organization.” A business valuation provides owners with insights to positively impact cash flow and reduce risk in a way that improves their financial position for the future.

Next week we will look at the importance of proactive estate planning for business owners.

For additional resources, we recommend:

Planning for the Exit Part 1: Are You Ready to Make An Ownership Transition? | (

Value Driver One – Value Driver One: Higher Profits and Cash Flow | (

Value Driver Two – Value Driver Two: Lower Risk | (

Value Driver Three – Value Driver Three: Higher Growth Potential | (


Written By:


Liz Briggson, Manager, Adamy Valuation | LinkedIn


Jacob Helwick, Manager, Adamy Valuation | LinkedIn

Are you Ready to Make an Ownership Transition?

Individual pointing to blog on laptop

Exit Planning Series
Are you Ready to Make and Ownership Transition?

DWH and Adamy Valuation began a series called “Tactical Tuesdays” in 2020 in response to the impact of the COVID-19 pandemic on our clients and business partners. The goal of “Tactical Tuesdays” was to provide up-to-date information that would allow leaders to make tactical decisions to run their business. As COVID (hopefully) winds down, the Tactical Tuesdays focus is shifting to address longer-term issues. Over the next several weeks, DWH and Adamy will be publishing a series of blog posts around exit planning for business owners.


A transition of company ownership, whether internal or external, is a complex process. Before attempting to sell a business, owners should make sure they are ready. This means determining their desired outcome, developing transition thinking, understanding options, and assembling a solid advisory team.

Determine Your Desired Outcome

For an owner to successfully transition ownership of their company, they must first understand their desired outcome. Outcome considerations include:

  • For family-owned businesses, is there a desire to keep the business in the family?
  • Does the owner want to retire, stay involved in the business, or do something else entirely?
  • What is the desired timing for a transition?
  • How prepared is the management team or the successor generation to take over the business?
  • What is the merger and acquisition (“M&A”) environment in the industry?
  • How much does the owner expect to make?

The desired outcomes will drive the preparation and structure of a transition and transaction.

Develop Transition Thinking

Transition thinking involves two main ideas:

  • The role of an owner – Owners should focus on maximizing the value of the business through optimizing cash flow, minimizing risk, and putting the best possible leaders in place to run the business. The owner should discontinue any activities that do not maximize the value of the business.
  • Understand what creates value – Business owners should understand how investors value their business and what actions they can take to increase the value. Investors are interested in the strength and sustainability of the company’s future cash flows. Investors will also adjust the amount they are willing to pay based on the risks a business faces, such as expiring customer contracts or high turnover in key positions.

Understand Transaction Options

There are many options available to owners and we will cover this topic in a future blog post.

Assemble a Solid Advisory Team

Owners must have an experienced team of advisors to support them through the transition and transaction. Steve Whitteberry of Invictus M&A says, “Owners should invest the time to find qualified advisors including M&A attorneys, CPAs with transaction experience, and an experienced investment banker. A strong team is a key to a successful transaction.” Members of this team include:

Succession/Transition Advisor – This advisor supports the business owner by developing a transition plan, which includes the identification of opportunities to maximize the business’ value, and then helps facilitate execution of the plan.

M & A Attorney – Transactions can have a significant amount of legal complexity, so engage with an attorney that specializes in M&A activity in your industry and can support your team throughout the process.

Certified Public Accountant (CPA) – Many owners do not consider the impact of taxes on the proceeds from a transaction until it is too late. Have a CPA with M&A experience get involved early in the process.

Wealth Advisor – The wealth advisor works with the owner to develop a plan for managing the proceeds of the sale to achieve ownership goals.

Estate Attorney – In conjunction with the wealth advisor and CPA, an estate attorney can help an owner and their family setup a structure that minimizes taxes and protects wealth for the current and future generations. (We will cover estate planning in-depth in a future article.)

Investment Banker – The investment banker will help prepare offering documents, bring the company to market, vet potential buyers, and guide the company through the sale process.

Valuation Advisor – Many transactions fall apart due to misalignment in the purchase price. The valuation advisor provides owners with a comprehensive valuation of their company based on the company’s performance, asset valuation, and/or market comparisons. (We will cover business valuation methods in next week’s article.)

Key Takeaways

  • Determine the desired outcome of a transition.
  • Cultivate a mindset of transition thinking from an owner’s point of view; focus on maximizing the value of the business.
  • Owners should understand the value of their business and the ways to maximize it; increased cash flow and minimized risks.
  • Owners should have an experienced team of advisors to assist in the transition.

Additional Reading


Written By:

Our Team                    

Ben Borisch, COO, Partner, DWH | LinkedIn


Our Team

Monica King, (former CEO), Managing Partner, DWH | LinkedIn


DWH Business Assessment Tool Explained

One of DWH’s most powerful tools is the business assessment.  We are asked about the assessment process and why we recommend it, so here is some helpful information.

What is the Process?

The assessment is a process DWH uses to collect quantitative and qualitative data.  This process includes a substantial information request list, interviews with your key leaders and stakeholders, and physical observations of a business and operations.  We focus on Leadership, Operations, Finance and Management Information, and Sales and Marketing.

We use this process to identify gaps between the current practices at the client and best business practices.  We also develop recommendations for closing those gaps.

What Do I Get?

The final product is a report summarizing the gaps in each area of the business.  We also provide recommendations on how to close those gaps.  The report includes a prioritized list of next steps, so owners and leaders can focus on the actions that will have the greatest effect on the business.  Priorities are based on value creation, and value creation is based on maximizing cash flow while simultaneously managing and mitigating risks.

We deliver this report to leadership and walk them through the findings.  This is a discussion.  We want to make sure that the client can use the report to correct the problems.  DWH often assists with implementing recommendations from the report.  If it is an area where we are not the best solution, then we can assist the business with the right provider.

Usually, the biggest impact an assessment report has is aligning the business leaders around the problems and prioritizing actions they need to take to address those problems.

How Does It Help?

Here are a couple of common stages in the business life cycle and how an assessment can help.

Distressed Business Businesses that are in financial and/or operational distress have less room for error.  An assessment will assist the business in identifying critical risks and weaknesses and then prioritizing actions that the business can take to improve performance.

Rapid Growth BusinessMost business owners recognize that effective growth requires a lot of planning and capital.  Our assessment for businesses looking to grow helps identify areas of the business that could challenge growth.  We also assist with forecast review and validation to ensure that financial projections are supported by market data and other relevant information, and capital sources and uses are aligned with anticipated investment, operating and working capital requirements.

Succession SituationTransitioning the business to a new leader (family or non-family) can be a leveraging event.  Our business assessment focused on succession will help to identify a path forward and potential risks that will need to be addressed.  We will also help to determine the business’s ability to fund the succession plan.  (For more information on this topic, please see this post on The Importance of Transition Before Transaction in a Family Business.)

Preparing for TransactionIn this case, the assessment would be tailored to help the business owner identify ways to increase the business’s value through improved cash flow and reduced risk in preparation for a transaction.  For more information on this topic, please see this webinar on Strategic Planning and Value Creation.)

Ultimately an assessment report is a powerful tool to identify risks and opportunities in a business and generate alignment with the leadership team on a path forward.

If you have any questions or would like to discuss how an assessment might help your business, please feel free to reach out directly to Ben Borisch ( or 616-780-5113).

How to Engage a Key Stakeholder: Your Bank

A close up photo of a DWH employee in a meeting.

Do you know how to engage and communicate with one of your company’s key stakeholders – your bank? We sat down with Jim Robinson, President and Dennis Gistinger, Senior Vice President of Southeast Michigan’s TCF Bank and asked them their thoughts on how best to engage with your bank.

  1. How has the level and frequency of communication with customers changed due to COVID?

The pandemic has led to an economic crisis unlike any other seen in a very long time and this calamity has been felt across the world. Almost every business has been impacted in one way or another and typically these changes were adverse and require critical and regular communication between the clients and the bank.

  1. If I am a client of the bank and my business has been negatively impacted by COVID, when should I talk to my bank about it?

You should talk to your bank sooner rather than later and be prepared to provide details, reports, and forecasts showing the magnitude of the impact to the business. We would always encourage customers to keep their bank up to speed with developments, both good and bad. Your bank can be a much better partner when they are fully informed.

  1. When the bank says they “want to see a plan”, what are some of the things you like to see in that plan?

Basic information would include a 13-week cash flow including cash balances/line of credit availability and a revised 2020 forecast balance sheet and profit and loss statement.  It is also important to deliver your required reporting on time to your bank (i.e. monthly borrowing base certificates with required backup detail, covenant compliance certificates, field audits, appraisals.) Additional requests for detail depend upon the severity of the impact to the financial condition of the company and to what degree the company’s repayment ability has adversely changed.

  1. What are your expectations for your customer to manage their plan?

We request these plans from the customer as a representation by management of the most likely scenario of the short-term financial results that are expected.  A current trend is also prepared to provide both worst case/best case results and include key assumptions. We assume these plans have been reviewed by the owners, controller/CFO and other advisors. The 13-week cash flow may be reviewed as often as weekly between the bank and the customer. This allows prompt communication on any variances and what caused the changes as well as the opportunity for the customer to modify the next 13-week cash flow and update new pro-forma financial statement. These are never easy conversations to have but the customer should be realistic about their plan and be willing to explain the steps on addressing the challenges. In good times or bad times, your relationship manager is your primary point of contact at the bank.  The more he or she is kept informed on the current status of the plan the better equipped they are to communicate pertinent details with other members of the bank.

  1. What tools do you have available to customers to manage through the current economic challenges?

TCF Bank was a strong supporter of the Cares Act Payroll Protection Program and we provided over $2 billion in loans [23,000+ loans to businesses with more than 250,000+ employees] to TCF Bank customers and non-customers.  We have approved a $1B loan program to support minority and women owned businesses. TCF is also a participating bank in the Federal Reserve’s Main Street Lending program to support larger businesses. We are a preferred lender with the Small Business Administration (“SBA”) and we also provide Asset Based Lending, Capital Solutions leasing and have a Structured Finance group.

  1. What significant red flags do you look for in a customer to identify if they are in financial trouble?

Red flags include recurring operating losses, sales declines, over-formula on LOC, overdrafts, unpaid or late taxes/rent/loan/leases, stretching of suppliers, late reporting of required financial information/reports, late or delayed replies from management to phone call or emails.

  1. If my company is close to renewal and is struggling or has violated covenants, will the renewal process look different?

It really starts with the timely, open dialogue that hopefully started 120+ days ago between the company and the bank. The bank should have already requested all current financial statements, reports and the items noted in the plan above. The loan renewal process this year could include direct conversation with the bank regarding the customer’s assessment of the financial impact of Covid-19. The review of the 13-week cash flow and or cash burn analysis may lead to a shorter renewal period to allow the bank to review the customer’s execution of the plan through the next several quarters. The bank periodically reviews other third-party reports such as field exams, appraisals and this may be required now due to the increased risk profile of the business that was caused by Covid-19.

  1. Will there be additional fees, documentation, or requirements?

Every situation is different and all factors need to be considered with an open mind. In banking there has always been the direct correlation between risk and return. If the risk profile of the credit has deteriorated due to any number of factors, i.e., reduced capitalization of a company, recurring losses impacting repayment, collateral impairment, etc., there is a potential increase in costs to compensate the bank for the additional risk as well as the increased administration of the credit. Documentation may need to be revisited if there are waivers or a reset of covenants in order to memorialize the changes to the loan documents.   In some cases, additional requirements might be necessary due to the increased monitoring of the credit that are now required. Additional monitoring, waiving, re-setting or frequency of administering the credit all increase costs which banks then want to be compensated for these additional expenditures.

  1. What does it mean to be put into “Workout or Special Assets Group (SAG)”? And how does this change things for me as a business owner? What does it mean for my business?  

As the owner: continue to remain open and honest about what is happening with the business.   Your relationship manager goes through an internal transition (“hand off’) of the credit to the SAG lender. SAG lenders are typically very experienced that work on a limited number of customers due to the additional administration required for these customers that have gone through some significant deterioration in their business. Typical Relationship Managers have a significantly higher number of clients than a SAG lender – you now have someone that can spend a greater amount of time reviewing a detailed plan. It is always the bank’s plan to see the business rehabilitated and returned to the previous healthy financial condition. Some businesses will need to consider difficult decisions and may need to engage with other consultants and advisors to determine options. Again, transparency with your banker will provide timely feedback from the bank on what the bank can or cannot do to assist during this challenging time.

  1. Is it possible for me to move back to the traditional banking side of the bank once I have been moved to Workout or SAG?

YES, this is possible and is usually the result of a strong partnership and open communication between the customer and the bank. Once the risk profile has returned to mutually agreed upon conditions, then a transfer back to the traditional side of bank is possible.

  1. When should I engage with an outside consultant?

The earlier, the better. Many consultants are willing to sit down with you at no cost to discuss your unique situation with you. If there is turmoil in your business, seeking sound third party consultants can be a very prudent decision. You should always discuss your challenges with your other key advisors; CPA firm, Corporate Attorney, Bank(s), loan officer.


If you would like to engage with an outside consultant, then call us. You are not alone. We can help. At DWH, we’re here for you, even remotely. Please feel free to reach out as we would be happy to discuss your situation. We would like to thank TCF Bank for their collaboration on this article. If you have questions on how they can assist you, feel free to reach out to them.

Heather Gardner
Managing Director, DWH Corp.
200 Renaissance Center, Suite 3140
Detroit, MI 48226
Cell: (734) 341.9336

Jim Robinson
Regional President, TCF Bank | Southeast Michigan
333 West Fort Street, Suite 1800
Detroit, MI 48226
Office: (248) 244-2866
Cell: (313) 622-5509

Dennis J. Gistinger
Senior Vice President, TCF Bank | Business Development Officer
Commercial Lending
2301 W. Big Beaver, Suite 200
Troy, MI 48084
Office: (248) 498-2865
Cell: (248) 760-0317

Blind Spots – Is My Company In Trouble?

Is your company in trouble? How can you tell? It may seem obvious, but even if you own the company, it can be difficult to know just where you stand. Troubled companies have warning signs which are consistent across industries. Here are things to look for within key functional areas of your business to determine if your business may be in trouble.

Company Financials

  • Reduced Liquidity: Liquidity is the ability of a company to quickly convert assets to cash so it can pay its bills and meet other debt obligations. Lack of liquidity and cash flow are the #1 reasons why most businesses fail.  Is your company maxing out its line of credit?  Are you having trouble paying bills or unable to meet the company’s debt obligations? Are you constantly holding checks until there is enough cash to cover them?  If so, you have a liquidity challenge.  See our blog article  “Preserving and Improving Liquidity During a Crisis” for more information.
  • Ongoing Losses/Reduced Retained Earnings: Retained earnings are an accumulation of profits and losses over a period of time. A negative retained earnings account on the balance sheet can reflect continuing losses and an inability to reinvest in the company. Does your company have ongoing losses each month? Is your retained earnings account on your balance sheet dwindling or becoming negative?
  • Debt/Leases: There are metrics and ratios to measure a company’s ability to cover its debt obligations. One metric is the current ratio (cash ratio), which determines if a company can pay short-term debt obligations. It is calculated by dividing current assets by current liabilities. A ratio higher than one indicates that the company will be able to pay off its debt. A ratio less than one indicates that a company will not be able to pay off its debt. Do you regularly review key financial metrics such as the cash ratio? Is the trend of your metrics and ratios over time positive or negative? Do you have a high concentration of leased assets because you cannot secure traditional financing?
  • Financial Records: Profit and loss statements should be prepared and reviewed at least monthly. An effective rolling 13-week cash flow forecast should be prepared and reviewed weekly. Are monthly financial statements being completed within a timely manner (example 5 business days)? Is financial reporting accurate, relevant, and timely?  Is management using this information to make decisions?  Are payments and invoices being entered into the company accounting system at least weekly?
  • Ratios/Trends: Look at the company’s income statement with at least 12 months of history and group costs into three categories – sales, variable costs, including direct sales costs, and fixed costs. What are your trends? Perform a breakeven analysis. What is your contribution margin? Is it declining? What is your EBIT?


  • Inventory: Inventory ties up cash or borrowing availability while the company is waiting to convert and/or sell the inventory. Are you tracking days of inventory on hand or other key metrics related to inventory?  Are you regularly reviewing inventory levels and taking actions to reduce inventory where appropriate?  Do you measure excess and obsolete inventory levels?  Are these numbers trending up or down?
  • On-Time Delivery: Delivery issues to customers can be an indicator of a problem with your operational leadership, equipment, or internal processes. Do you have internal metrics that track on-time delivery? Are these metrics reviewed frequently, and are corrective actions taken and documented? Are you regularly missing your monthly revenue forecasts?  Have customers threatened to pull business due to delivery issues?
  • Physical Assets, Facilities, and Equipment: A company’s assets require preventative maintenance programs to keep them operating at peak efficiency. Has the company been deferring maintenance on equipment due to cost concerns? Are the assets deteriorating due to the company’s inability to reinvest in them through maintenance and upkeep? Has the company’s capacity shrunk due to unrepaired equipment?
  • Quality Issues: Ongoing quality issues with your product is indicative of a breakdown in your equipment or internal processes. Do you have internal metrics that track quality?  Are these metrics reviewed frequently, and are corrective actions taken and documented? Are you receiving quality notices from your customers on a regular basis? Is your internal cost of scrap continually high?  Have customers threatened to pull business due to quality issues?


  • Company Leadership: Effective leadership in a crisis is about setting a clear strategy and plan, ongoing communication with stakeholders about the plan, and effective execution of the plan. See our blog article – “Effective Leadership in a Crisis”. Leaders must accept responsibility for current conditions and look for solutions. Is your company leadership defensive and ignoring negative information? Is there a lack of accountability within the leadership team? Does leadership place blame on others for current challenges? Has a clear vision of how to move forward to address and resolve current challenges be developed and communicated to key stakeholders?
  • External Communication: Regular communication with your external stakeholders (ex lenders, vendors, customers, etc.) is needed to maintain credibility and trust. Are you regularly communicating with your key stakeholders?  Do you have credibility problems with your key stakeholders? Is your company facing mounting pressure of litigation? Are your vendors threatening to stop shipments of supplies to you?  See our blog article “COVID-19 Advice – Banking Relationship” for more information on communicating with your lender.
  • Internal Communication: Regular communication with internal employees helps the company to move forward in the same direction, towards the same vision. Is there a rhythm for regular internal communication with employees (not just managers)? Are employee questions being answered? Is leadership encouraging feedback from employees?
  • Loss of Key Employees: Often, when a company is starting to experience distress, senior members of management may leave to take jobs elsewhere. Departments like finance, purchasing, quality, or sales may begin to feel the additional stress of upset customers or suppliers before the rest of the company is aware or the results are visible on financial reports.  This results in current employees with less experience filling these key positions, which obviously does not help a troubled company. Does the company have the inability to pay talent or maintain an attractive work environment? Is there a loss of institutional knowledge or lack of trust in the company?

A troubled company often exhibits some combination of the factors described above. If your company is exhibiting some combination of the factors described above, then call us. You are not alone. We can help. At DWH, we’re here for you, even remotely. Please feel free to reach out.


This post was written by Heather Gardner | LinkedIn

All companies experience change.
Plan for it with us.


Business Resiliency Through Scenario Planning

Doug Wilterdink

Uncertainty surrounding the impact of the COVID-19 pandemic and the shape of the economic recovery has made it impossible for small and middle-market business leaders to predict whether, when and how business will return to “normal”.

Still, leaders are tasked with steering their businesses forward beyond the immediate crisis. Predicting the severity of impact can help support public policy, but it does not help assess and prepare a company’s fitness for a fundamentally different new normal. The uncertainties shaping the new future call for “scenario planning,” which provides critical insight to business owners and leaders to ensure business strategy, operating structure and organizational capabilities are resilient post-COVID-19.

Pioneered by Royal Dutch Shell amid volatile global oil markets in the 1970s, scenario planning is not about forecasting or envisioning the future. It’s a process to prepare a leadership team and key stakeholders around the idea that planning for “normal” isn’t good enough.

Kodak and Blockbuster present two cautionary examples. Kodak invented the digital camera and Blockbuster’s Total Access outgrew Netflix initially. These incumbents were well positioned to compete and even saw the change coming; in some cases, they were driving it. So what went wrong? Kodak simply couldn’t accept the inevitable decline of its profitable film business and pivot to new ways for consumers to experience pictures. Meanwhile, Blockbuster’s investors and franchisees couldn’t get on board with a different value proposition.

These examples speak to a critical lack of stakeholder alignment. One of the most important reasons for scenario planning is to rally leadership teams and stakeholders around the fact that the strategic vision, operating model and capabilities must be aligned to compete in any plausible future.

Prediction vs. Exploration

There are two types of scenarios used when looking toward the future: predictive (as in: good, not-so-good, bad) and explorative (think: post-apocalyptic, brave new world).

In the former type, we extrapolate trends, predict the severity of the impact of events, and plan for a future that is a slightly changed version of the present. This is helpful for annual planning and budgeting and easy to accept for most stakeholders. In the current crisis, consideration of different levels of the economic impact of the pandemic can be helpful in determining the impact on a business and stress test its capability to withstand or recover.

Figure 1 – Predictive vs. Explorative Scenarios


Scenario planning, on the other hand, involves the definition of alternate futures based on a few dimensions of fundamental uncertainty, thus exploring very different situations and assuming the future is not what it used to be. This shouldn’t be used for planning and budgeting. Typically, the uncertainties are related to long-term changes, such as geopolitical or economic shifts, deregulation or new technologies. Yet, due to COVID-19, some of these uncertainties are near-term.

Testing business resiliency and risk with scenarios is no longer a theoretical exercise for many large enterprises. It has become a priority for chief strategy officers, heads of risk management and chief legal officers.

One chief innovation officer at a major global risk insurance company describes working with his clients on scenario planning to help enterprises consider the long-term effects of their short-term decisions during this crisis. This CIO usually looks at longer term issues for the client companies, such as third-party threats, talent poaching and determining the yield from intellectual property assets. His team typically explores up to four or five distinct scenario narratives, expanding upon the basic variations to get at combinations of specific uncertainties and severity of threats. Each scenario planning exercise is customized to the specific industry and enterprise.

Using Relevant Uncertainties to Define Scenarios

COVID-19 can be a cause of discontinuity and a catalyst for accelerated trends, both of which can be a basis for defining scenarios. For leaders to engage in a meaningful and actionable strategic review of their business in a range of scenarios, the variables and trends subjected to discontinuity must be relevant to their business. A fundamentally different state on each variable should shake the business model to its core, challenging whether the business is resilient.

A software development company, for example, could consider trend acceleration and disruptions related to virtual engagement with customers and off-site service models: Is our operating model built to support custom software implementation through in-person development testing, training and service, or do our teams seamlessly collaborate virtually with customers? The uncertain variable here is the how virtual the collaboration can be.

Another potential disruptor is uncertainty around trust in business partners: Will we live in a world where we assume that our business partners are trustworthy (in the presumption of service levels and enforcement of trade rules) or will we require explicit guarantees (verification of performance, and escrows or blockchain technology to facilitate trade in capital assets and intellectual property)?

Trust in business partners presents an uncertainty variable for many industries. For a Tier 1 or Tier 2 supplier to an automotive or branded durable goods manufacturer, there are clear expectations under normal business conditions. Today, even the most sophisticated manufacturers are scrambling to understand risks associated with their fine-tuned supply chains, as we shift from performance measurement to unverifiable abilities to resume business. Going forward, will we see a shift in supplier bases as risk management takes on a larger role in supply chain management?

Plotting these variables and defining the resulting combinations yields four scenarios of futures dubbed Good Neighbors, Virtual Partnerships, Local Chains, and Virtual Growth. Testing the ability of a software development business model to survive or thrive in each helps us to identify opportunities in ensuring strong local partnerships, robust yet inoffensive ways to verify capabilities, and a structural capability to work with our clients in both physical and virtual software development business scenarios.

Figure 2 – Scenarios for a Software Development Business


Innovation itself can be disrupted in a crisis like COVID-19; will our business model be a catalyst for accelerated innovation, or will it be a casualty of disrupted budgets? The value proposition can result in both goodwill and strife with customers. Consider telemedicine. While health care providers are scrambling to roll out new ways to connect with patients, system crashes and a general lack of preparedness are undermining their efforts. Health systems will need to rapidly pick winning solutions for telemedicine delivery platforms. The forced increase of telemedicine due to COVID-19 will result in an accelerated shake-out of winners and losers.

These examples illustrate how scenario planning challenges the very ability of an enterprise to survive or compete. If done well, the exercise makes everyone just a bit uneasy. But there are clear benefits. Scenario planning has the power to inform leaders in making and convincing stakeholders of fundamentally different strategic choices in market positioning, innovation, value propositions, technology deployment, required capabilities and talent, as well as partnerships that a company must bring to bear in order to compete successfully in a post-pandemic new normal.

Marcel van der Elst is a senior director with DWH Corporation based in Grand Rapids, Michigan. Mark Johnson is a co-founder and managing partner at Michigan Software Labs based in Ada, Michigan. Ben Borisch, partner and COO at DWH Corporation, and Greg Reese, a copywriter based in Grand Rapids, contributed to the article.

Figure 3 – Ten steps to developing scenarios for your business resiliency planning