If you want to increase the value of your privately held company, it’s not just about profits. While profitability is critical, there are other factors that can elevate your company’s valuation when it comes time to sell. Three years ago, I introduced a CEO to an excellent M&A firm. They helped package his company for sale and found a strategic buyer who paid $50 million more than he ever imagined selling for.
Nail these tips now, and your company will be positioned to sell for a higher price.
Don’t put off getting your accounting in order. Be ready at all times so that you can respond quickly when information is requested. Buyers will see your company as well organized and will be more likely to pay a higher price when they don’t anticipate unforeseen surprises.
Tout your company’s talent as an asset! Employees with high skills add value, particularly when it comes to the sales team or other key roles that drive revenue, efficiency or innovation within the company. Loyalty is also a distinguishing characteristic to promote – buyers want to know that key employees will stay for the long term.
Office Culture that Feels Amazing
Enlist the help of a designer to “stage” your office so that the physical space looks great and feels like an incredible workplace. Freshly painted walls, organized shelves, and attractive wall art all add to your company’s image.
Strong Branding & Name Recognition
The stronger your company’s brand recognition, the better. Rollout a stellar PR strategy 12-18 months before the start of the sale process to help show that your company is in a growth mode. Refresh website content and other communication materials so that they’re relevant and in alignment with the message you are promoting to buyers.
Recurring & Diversified Revenue
All revenue is not equal. Buyers will – and do – pay a premium for booked reoccurring revenue. This means ongoing contracts with customers and a track record of predictable growth. Diversified revenue is also a must. Broaden your revenue base so that no more than 10-15% is based on one single customer.
The Company Runs Without YOU
Businesses that rely less on the owner go for a higher selling price. Take steps now to increase your company’s independence and ability to remain productive during an ownership transition.
Share an Inspiring Vivid Vision
When you have a clear vision, ideally a Vivid Vision document, it will excite and inspire the buyer about the company’s future and abundant potential. This also helps with demonstrating the alignment between you and your employees.
Trustworthy & Fantastic M&A Firm
M&A Firms are a dime a dozen. However, finding one that can create a multiple-bid buyer market for you is what drives up your company’s selling price. Over the past eight years, I’ve finally found a few that I introduce companies to all the time.
And those are the things you need to nail down before you think about selling, because a company is a full package – like a well oiled machine. Making sure that all the pieces are working is essential to success, and what attracts buyers.
The COO Alliance is here to help with these, and many other, challenges facing COOs today. For more information, and to apply, click here.