How Do I Maximize the Sales Price of My Company?
Maximizing the sales price of a business involves focusing on the “value drivers” of the industry. Value drivers are the set of key factors that reduce financial risk, improve financial returns and create value for the company. These aspects are used by buyers, investors and financial lenders to determine the value of a company. Value drivers are not unique to maximizing the sales price of companies but are sound business practices.
Value drivers for all industries include: a solid diversified customer base, a strong management team, operating systems that improve the sustainability of cash flows, an achievable growth strategy, a facility appearance consistent with the sales price and effective financial controls.
Industry specific value drivers include: extent of referral network, certifications, competition, specialized processes, geography served, affiliations, environmental issues, growth opportunities, seasonality, supplier relationships, equipment quality, technological expertise and backlog of contracts.
The sale of one’s business may be the most significant financial transaction of an owner’s life. Early planning for effectively maximizing the sales price of a business is the first step in a successful exit plan.