It’s a fact of life that eventually all of us will have to one day exit our business, either in an organised way or not. So, whilst day to day we may be continually running on that hamster wheel with our heads down, at some point, we need to look up and assess why we are doing this. What are we building for? And are we directing our efforts at the most important and potentially valuable aim – our exit?
Establishing a structured exit plan, well before you ever need one, should be on the New Year’s Resolutions list for all business owners.
So, what are the actions that you should take to make your business more valuable and more attractive to the greatest number of potential purchasers? There are many different factors, some sector specific, and some quite typical across all industries.
Through Kay Johnson Gee’s membership of The Corporate Finance Network we have access to a tried and tested programme proven to increase the value of your business, and more importantly, to make it more saleable.
Research of business owners is conducted regularly, and here’s one fact from some recent findings of 14,000 businesses, who had received an offer to buy their company in the last 12 months.
The average sales offer received among all of the businesses surveyed was 3.7 times pre-tax profit. However, these businesses were then further analysed between those businesses where the owners were responsible for all the sales effort, and those that were remote from the sales process.
Where the owner does not know his/her customers personally and rarely gets involved in serving an individual customer, the offer multiplier went up to 4.49.
Companies where the founder knows each of his/her customers by first name received much lower offers of just 2.93 times pre-tax profit.
This demonstrates that in order to be more attractive to potential purchasers, the business needs to operate day-to-day independent of the owner as much as possible. An easy thing to say you may think, but if you’re not in that position at the moment, Kay Johnson Gee can help with ideas and strategies that allow you to move towards that position over the coming months and years.
And that’s just one of a number of areas we look at if we conduct our unique Exit Planning Workshop with you. For more information contact to our Corporate Finance Partner, Steven Lindsay.