What’s your business worth? Want to know how to drastically increase the amount a buyer will pay you? A few years ago, I introduced a friend to an M&A firm. His company was doing about $30 million in revenue and he was really hoping to sell for $50 million. In the end, he sold for close to $110 million and was able to drive the maximum sale price because he nailed these insights:
- 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 easily 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 solid, 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.
- 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.
Email me if you’d like an introduction to help you sell your company – Cameron@CameronHerold.com