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 awesome 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.
Well-Organized Accounting: 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.
Awesome Employees : Tout your company’s talent as an asset! Employees with strong 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 work place. 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 prior to 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.
Email me if you’d like an introduction to help you sell your company – Cameron@CameronHerold.com.
Have you ever observed an athlete right before a competition? The next time you watch the Olympics take a look at the high jumpers. You’ll see many of them standing very still just before they start running to the bar. Then they’ll close their eyes and you’ll see their head bobbing up and down as they imagine running up to the bar—but they haven’t even moved. Sometimes they even throw their head backwards a bit as they jump over the bar in their mind. Then they open their eyes, stare at the bar intently, and begin to recreate in real time what they just visualized. Downhill skiers do this too–they’ll use their gloved hand to pretend to ski the entire course (some imagine it quite realistically in their minds, and you’ll see them respond physically to imagined obstacles on the hill). Whatever the sport, these athletes are using visualization to achieve their desired results, and by imagining the obstacles they might face, they prepare themselves mentally and physically for the challenge. In fact, they have such a vivid vision of themselves performing, that it becomes completely instinctual.
Read this poem – courtesy of a very close friend of mine… Then ask yourself, if you’re thinking big enough for your business…
One of the best parts of creating a Vivid Vision is the chance it gives you to tear off the shackles of reality and logic and fantasize about your future. But often, successful entrepreneurs have a hard time tapping into their creative side. The pragmatic, logical thought patterns that made them successful don’t allow a lot of room for imagination.
Chances are you’ve built a nice office for yourself. It’s a comfortable space filled with everything you need to get your job done, whether it’s your laptop or pictures of your family when you need a bit of motivation.
