As corporate finance experts who help to sell businesses, one of the things we find most rewarding is being part of so many diverse stories.
People will sell their business for a broad array of reasons. For some, it’s time to retire and take the pace of life down a gear. For others, they’ve decided to try their hand at a different venture. Each sale we help achieve is totally unique, but a common feature among all of them is a business owner who wants to know “how much is my business worth?” – and obtain maximum value when they exit.
In our previous blog, we addressed the question, “How do you value a business?” and we showed you how to work out the desktop value of your business using a multiple valuation. However, this valuation methodology doesn’t take into account all those value drivers that are not shown in your accounts; those that could make your company more valuable and help increase the multiple that a prospective buyer is willing to pay for your company.
So, how can you capitalise on these aspects of your business and drive value in your business sale?
Here are 5 things that will have a positive impact on the what someone pays for your business and help you optimise that sale price…
1. Growth potential of the business
What’s your organisation’s future ability to generate larger profits, expand its workforce and increase production? Find ways to illustrate this when marketing your business for sale.
2. Recurring revenue
Show buyers what portion of your company’s revenue is predictable and stable and how it can be counted on in the future with a high degree of certainty.
3. An enviable and loyal customer base
Got customers with a strong affinity to your brand, who repeatedly use your products and services and recommend them to others? Prove it to buyers with sales data, campaign response rates and testimonials. In the age of the attention economy, a solid customer base is worth its weight in gold and could seriously increase the saleability of your company.
4. The buyers motive
If a buyer is looking to buy your business as part of their strategy to grow regionally or internationally, they’ll want access to your technology and strong management team to help them do this. Show them how the existing infrastructure of your business can help bring their strategy to life and they will consider paying more for your business.
5. Impact of creating choice
Having numerous interested buyers can have a significant impact on the multiple that someone might pay for your business. Get help with scoping out various potential buyers so that you can market your business more widely and create an ‘bid’ atmosphere that sparks healthy competition – and get you results.
None of these value drivers are highlighted in your accounts, yet they can definitely drive the ultimate value of your business. Make sure you have ample information at the ready when you’re talking to buyers – not just the last 3 years accounts.
Are you wondering ‘how much is my business worth?’ Need more help achieving your maximum business sale? Here at Entrepreneurs Hub, we work closely with our clients to ensure they are clear on their value drivers, including those that are not included in the financials. We’ll help you get properly prepared and then proactively market your business for sale by identifying a choice of interested buyers, presenting the opportunity to them and negotiating the sale.
If you would like guidance on the valuation of your business, please contact us on 0845 067 8678 or email email@example.com