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Conan O'Brien on Strategic Planning and How to Sell Your Business

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in The Business of Business Finance

Much of the business world has been following with great interest the late night saga between Jay Leno, Conan O'Brien and NBC over the hosting duties on the Tonight Show.  While interesting, this debate also has an important, instructive lessons for any business owner who's even vaguely contemplating a business sale.

While it's true that Conan will walk away with nearly $40 million by vacating his late night time slot, it's how he managed the buyout that business owners can learn from.

Back story: In 2004, NBC was desperate to retain Mr. O'Brien as the heir apparent to host the Tonight Show.  Because of timing, corporate needs and good lawyering back in 2004, Mr. O'Brien may be jilted, but he is $40 million richer.  With the clarity of hindsight, NBC could have avoided losing Conan and $40 million, but at the time, they were in a fierce battle with CBS over a very valuable late night audience.  So valuable that NBC was willing to make a commitment to Mr. O'Brien they would not even consider today.

This highlights an often overlooked consideration of a small business (under $50 million) sale.  Extracting maximum value for your business, is seldom dependent on your timing, but rather the internal, corporate timing of your potential buyer.  You, of course, will never be awarded these timing dynamics, but an experienced advisor (like Conan's agent) will know how to recognize and take maximum advantage of these dynamics.

In 2007, one of my clients was able to sell their company for $52 million dollars.  Today, using current multiples, that same company would likely sell for about $15 less, or $5 million per owner.  At the time, however, the much larger acquirer needed access to their client base and contract vehicles.  Recognizing this window of opportunity, a deal was struck and champagne popped (you can buy a lot for $5 million).

Much like Mr O'Brien, they were able to reap a significant personal windfall by recognizing external market dynamics and exploiting them.  The lesson:  Timing for maximum company value is seldom contingent on your personal timing alone.  Just ask Conan.

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