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BUYING A SMALL BUSINESS

Business for Sale: A Coaching Firm for $1.25 Million

A successful coaching firm may provide strategic growth for a larger buyer hoping to expand its Fortune 500 client list

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In 1989, Dan McNeill attended a personal development seminar taught by Thomas J. Leonard, a prolific author and entrepreneur who played a big role in the development of the personal coaching industry. McNeill, who had recently left a marketing job at a computer maker, soon decided to become a coach himself.

Today, the McNeill Group consists of 10 coaches who brought in $1.6 million in revenue for 2008. The coaches, who work as independent contractors based around the country, charge an hourly rate of $350 to $500. They make a 15 percent sales commission and get 50 percent of the revenue from their coaching work. McNeill takes the remaining 35 percent as gross profit, clearing a 15 percent net profit after expenses. Clients include executives from Siemens, ADP, and the Federal Reserve.

Once considered punishment for executives gone wrong rather than an opportunity to learn useful new skills, executive coaching is now universally accepted. There are about 40,000 certified coaches in the U.S., and coaching has grown into a $2.4 billion-a-year industry. McNeill, 69, says he is selling to retire and to write a book about his coaching experiences.



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Price Rationale: The price is slightly lower than the company's average annual revenue over three years. It includes intellectual property protections for the firm's training program.

The Pros: McNeill is willing to stay on as a paid consultant for up to two years. And he has worked out a compensation plan with his coaches that would pay them 30 percent of the proceeds from a sale over two years to ensure they stay with the company. A new owner could also consider licensing the company's training program for additional revenue.

The Cons: The company's coaches also serve as McNeill's sales force, which limits growth prospects. To further expand, a buyer would probably need to bring in a standalone sales force.

The Bottom Line: As the economy comes back to life, there will probably be more movement among managers, thus increasing demand for coaching. That could make the company a good strategic fit for a coaching firm looking to expand its big-company client list or for an executive search or human resources firm looking to add coaching expertise to benefit its clients.

Inc. has no stake in the sale of the business featured. The magazine does not certify the accuracy of financial or other information provided by the seller. Inquiries should be directed to Dan McNeill at dan.mcneill@mcneillgroup.com or 858-618-2711.

Inc. also publishes paid business listings in the back of the magazine.

Last updated: Dec 1, 2009

DARREN DAHL

Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.




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