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BUSINESS WEALTH SOLUTIONS,LLC
Joan M. Ridley
Pres., CFP™, CEPA, CBI


2911 Turtle Creek Blvd., Suite 300
Dallas, Texas 75219


E-MAIL:  info@businesswealthsolutions.net
PHONE: 214.692.9192
FAX: 214.523.9001

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What Could Your Business Sell for Today

By
Joan M. Ridley, CEPA, CBI, CFP™

Let’s start by defining “sell” as the total amount an acquirer would pay at closing including the down payment, bank financing, and an owner held note. So, we’re not talking about a number that a competitor suggests casually over a drink at a trade conference. Let’s also assume that yours is a financial buyer, and not a strategic buyer.

Step I – Show Me the Money

The first thing a potential suitor will look at is how profitable your business has been over the last three to five years, and, the projected revenues and profitability. If your company has had increasing revenues and profitability during that time, and, if your company is a top performer in your industry, your potential buyer is likely to seek more information.

Step II – Can Past Performance be Repeated

The next question is a buyer will ask is, will that stellar performance continue under new ownership? A buyer will determine the likelihood that current performance will continue under new ownership based on a number of aspects called “Value Drivers”. There are about 55 of those, but let’s take a look at four broad categories that are important to a potential buyer:

Financial Record Keeping

Your financial records tell the real story about your business, including how well it is run. They also can reveal if data has been entered properly. If your financial records are not in order, the would-be buyer will look no further. He cannot trust what he sees and you have lost credibility.

Management

Can the business run smoothly without you? Is there a plan to retain key management after you leave? Could management leave and take customers and trade secrets with them?

Sales and Strategic Marketing

What industry are you in? What is your product and service offering? Is there a sound strategic plan to bring in business and grow the enterprise? Is there a sales management system in place to insure that sales people have a plan and are accountable for their performance? Does compensation for salespeople make sense? Is it sustainable? Is the salary/draw/ commission record keeping accurate and timely?

Operations

Does your company operate as efficiently as it could? Are there gaps and overlaps in the work flow process that are having a negative effect on your bottom line and employee morale? Is the work flow process documented?

The answer to the question “what could your business sell for today” is not so simple. What a buyer will pay depends on: 1) how profitable the business has been; 2) the likelihood of achieving the same or increased profitability in the future; and 3) the terms of the transaction.

 

To discover what your company could sell for today, and, the steps we can take to increase value, call us at 214-692-9192.

 

Joan M. Ridley is a Certified Exit Planning Advisor, a Certified Business Intermediary, and a Certified Financial Planner™. She is President of Business Wealth Solutions, a business consultancy that helps business owners improve their top line, bottom line and present their financials to best showcase company performance. When you are ready, we have the conversation about what comes next and what you have to do to get there. Visit www.bwsllc.net and call us today at 214.692.9192 for a complimentary meeting to learn how we can help you get where you want to go.

Copyright 2013 Joan M. Ridley

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