How do you know if you are really ready to sell your business? When many business owners consider selling, their business’ value should be at the forefront of their thinking. However, most think about a level of profit (EBITDA, Cash Flow, etc.) and then use a multiple to arrive at a market price. This can be only one narrowly scoped view of the business’ value. For example, while EBITDA provides a measure of cash flow, but there are additional benefits or available equity that a business can offer.
Every business has a value that is based on principles of business value. Business owners need to be positioning their business based on business value principles to maximize the value and develop a clear strategy while building the business or planning to sell.
If you are truly looking to prepare yourself to sell your business, here are a few things that you definitely need to consider:
1. Understand the Business’ Value Pillars and Drivers
We will perform an in depth assessment and analysis to understand the value pillars and drivers of the business. This will lead to developing the Value Plan.
2. Develop Value Plan
Based on Synergistic strategy that leverages strengths within the business to drive increasing value. Look to make an earnings move while moving the business closer to the “ideal business” model.
3. “Ideal Business Model”
A business owner needs to demonstrate to a suitor that his/her business model works and will work going forward in years to come. This is achieved thru moving a business toward the “Ideal Business Model”. This will show competence and credibility. A buyer will always have ways for a business to improve so he/she can realize higher return on investment. But most financial buyers want to see some level of integrity in the business model first. Then their opportunity to enhance the business (i.e., uncover value) is more achievable.
By taking an overall business value approach, this will enable your business environment and all involved teams to participate and influence innovative concepts and value moves resulting in increased business value.
If you are in need of some guidance to help you prepare your business to sell, consider requesting a free “Looking Glass Consultation” with me to help you get the process started! I look forward to hearing from you!