When you want to sell your company, you want to increase the value of it first. It might surprise you, but increasing that value isn’t all about profits. While profitability is critical, there are other factors that can elevate your company’s value when it comes time to sell. So, what are they?
If you’re in the market to sell your company, this blog is here to help! Here are some tips on increasing your company’s value. Nail these 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. When it comes time to sell your company, buyers will see your company as well-organized and will therefore be more likely to pay a higher price when they don’t anticipate any unforeseen surprises.
“Reliable financial controls also support the claim that the business is profitable. Buyers generally conduct financial due diligence, including reviewing past finance documents and checking all controls in place. If unsatisfied, the buyer’s auditors may opt against buying your company.” – Forbes
Your company’s talent is an asset, so make sure the buyers know that when it’s time to sell your company! Employees with high skills add value, especially when it comes to the sales team or other key roles that drive revenue, efficiency, and innovation within your 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
When you want to sell your company, it will be highly beneficial for you to enlist the help of a designer to help “stage” your office. You want your company’s physical space to look great and feel like an incredible place to work. Freshly painted walls, organized shelves, and attractive wall art all add to your company’s image.
“Prior to listing your business, make sure your facility is looking its best. If you’ve been considering any renovations, new furniture purchases or even just a fresh coat of paint, make sure it is all complete before any buyers step foot in the door.” – Inc
Recurring and Diversified Revenue
All revenue is not equal. Buyers will – and do – pay a premium for booked recurring revenue. This means ongoing contracts with customers and a track record of predictable growth. When you’re trying to sell your company, that’s what buyers desperately want to see.
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
When you sell your company, know that businesses that rely less on the owner to run smoothly go for a higher selling price. Take steps now to increase your company’s independence and ability to remain productive during an ownership transition. This can sometimes take time, so even if you aren’t looking to sell anytime soon, it’s definitely something you should still work on.
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. When you want to sell your company, buyers need to be able to see where it’s going and what sort of future it holds. Your Vivid Vision is beyond useful for that.
A clear vision of your company’s future will also help with demonstrating the alignment between you and your employees.
Trustworthy and Fantastic M&A Firm
M&A firms are a dime and dozen. However, finding one that can create a multiple-bid buyer market for you is what drives up your value when it comes time to sell your company. Make sure you do your research and find the best M&A firm you possibly can.
Those are only a few of the things you need to increase the value of your company. When it comes time to sell your company, there is so much you can do to increase the price of it. Stayed tuned for a part two of this blog where you can learn even more tips to do just that!
Have you ever been involved in selling a company before? Any tips? Leave them in the comments below!
If you have questions or would like more information, I’d be happy to help. Please send an email, and my team will get in touch with you!
Editor’s Note: This post was originally published in December 2017 and has been edited for accuracy and comprehensiveness.