6 Value Drivers to Steer the Sale of Your Company towards Success
Selling a business is one of the toughest decisions an entrepreneur has to make. After investing so much time and money to build this venture, it’s understandable that you want the best value for it. Whatever drives the exit event, you have an opportunity to make money at this point. But how do you do this?
Value drivers make all the difference when selling a business. These are characteristics that potential buyers look for in a company they wish to acquire. These features reduce the risk associated with owning the business for sale. Alternatively, these essential characteristics boost the prospects of the company to thrive in the future.
By improving performance in these areas, you steer the sale of your company towards success. Here are some of the key value drivers you should focus on for a successful business sale.
1. Broad Customer Base
A diversified customer base is one of the strongest assets when selling a business. Strive to create a customer base where no single client accounts for above 5 to 10% of total sales. This approach insulates your company from collapse in case it loses a single customer. If you realize the company relies heavily on one account, it’s time to invest heavily in extra capacity to attract more customers.
2. Experienced Management Team
An experienced management team is a key value driver. It assures buyers that the team customer relationships are easy to maintain. A quality management team can capably lead your business even after your exit. It gives a sign to buyers that your business will continue operating successfully.
3. Potential for Growth
Potential buyers seek to acquire your business for its future income streams. For this reason, you should develop a realistic growth plan. With a documented growth plan, you demonstrate to buyers the value in your business even after the acquisition.
4. Stable Cash Flow
When buyers assess your business, they first check the bottom line and cash flow. Stable and predictable cash flow is a major attraction for buyers. If there are opportunities for an increase in cash flow, you have better chances of closing the deal.
5. Financial Systems/Performance
Potential buyers go beyond the numbers you present. They look at more than the high levels of turnover and profit margins. Use different tools to show the accuracy of your data through efficient reporting, planning and forecasting.
6. Operating Systems and Procedures
Are there systems, procedures and policies in place to guarantee continuity of your business after the sale? Automated and manual procedures assure buyers of continued operations after your departure.
Some systems required include personnel recruitment, training and retention, employee manuals and customer acquisition. Others are inventory and fixed asset control and business performance reporting. These systems point to guaranteed stability which is a major attraction for buyers.
Developing an Exit Plan
We help you develop an exit plan that incorporates these value drivers. Our mission is to boost your company’s transferable value and make it more attractive to buyers. We appreciate a business sale is tough, and we work with you to create a custom exit plan that perfectly suits your goals.
Our team helps identify and articulate these value drivers and use them to maximize purchase price. If you plan to sell your business, contact us today and let’s develop the best business exit strategy together.