This will be my last post of 2018. Happy New Year to everyone! I thought I would end the year on a humorous note. Enjoy!
Have you ever had one of these days?
The optimal way to avoid this tragic business metaphor is to build your company as if you are going to get, at any moment, an offer to sell that you cannot refuse. Building for exit value optimization is a great way to build a highly valuable business regardless of your interest in selling it someday. Here is a pretty comprehensive list of areas to address in priority order (at least the top four in bold) to optimize exit value and, by default, build a healthy and thriving organization.
Increased exit value drivers:
- Reduce the risk for the buyer
- The entrepreneur/CEO/Owner is redundant in the business
- Powerful, healthy Management Team/Bench for key positions
- “Rembrandts in the attic” – Value beyond the financial returns – Value over discounted cash value
- Healthy culture/High engagement organization
- Revenue predictability and quality over several years, consistent growth in Revenue, Profit and Cash
- Show significant growth potential in current, adjacent and/or new markets
- Bring multiple buyers to the table
- Documented Systems
- Customer diversification
- Have no one customer that is more than 10% of total revenue/profit
- Protect IP
- Dashboards and KPI visibility
- Make books squeaky clean – Taxes, receivables, short and long-term debt, etc.
- Clean records/good data
- Clean up facilities if applicable
- HR compliance
- Tighten up ALL Agreements
- Solid employee agreements,
- Solid vendor/supplier/technology/customer agreements,
- Partner legal agreement,
- Real Estate agreements, etc.
- Address any pending/active lawsuits, etc.
If these things (and possibly others based on your industry, etc.) are not in place, a savvy buyer will chip away at the original offer and may cause you to inadvertently sell at a much lower price than you would like.
Please see the two-minute video below for an overview of how to systematically and deliberately address many of these issues.
For MA companies ONLY, as an approved Training and Development provider, Catalyst Growth Advisors can offer you 50% off program fees. Click here to see if you qualify.