What’s your business worth?
Want to know how to drastically increase the amount a buyer will pay you?
Like I said in part one of this blog, several years back I introduced a friend to an M&A firm. His company was doing about $30 million in revenue, and he was hoping to sell for $50 million. It turned out that in the end he sold it close to $110 million and was able to drive the maximum sale price.
How was he able to do this? Well, it’s because he nailed these things…
Predictable Cash Flow: Think of revenue and cash flow as the starting point for any buyer. A steady stream of predictable, reoccurring revenue is ideal and buyers will pay more for companies with projected cash flow.
Scalable: Setup systems that efficiently help scale without needing more people. Efficiency is key. And, the easier you can add new customers, the more attractive your company will be to a buyer.
Goodwill: Name recognition, customer awareness, and good PR go a long way when attracting someone willing to pay more for your company. Launch a good PR campaign a year out from when the sales process begins to boost goodwill within the marketplace. High Net Promoter Score Customer ratings also help drive increased purchase prices.
Know Your Value: Knowledge has power! Get several independent valuations by reputable firms so you have a rough idea of what your company might sell for. Consider additional parts of the company that valuators may not see and what actions you might be able to take ahead to increase the company’s value in 12 months. Small acquisitions and drastic overhead cuts are a great place to start.
Transparency: Buyers don’t like surprises, so operate above board and be prepared show value that they might not see and explain information they might question.
Growth Potential: Documented growth shows the company’s future is stable, if not predictable. Show them that your company has a ton of upside! Consider acquisition opportunities, additional product lines, untapped markets, sales funnel projections, PR that’s about to come – anything you can share about the company’s growth potential will add value.
The COO Alliance is here to help with these, and many other, challenges facing COOs today. For more information, and to apply, click here.