10 steps to maximise the value and saleability of your business – Step 2
We’re pleased to bring you the second instalment of our 10-part blog series about the steps you can take to improve your business in the eyes of an acquirer, before taking it to market:
Step 2 – Demonstrating growth of sales, profits & cash with good projections
It’s important for business owners to understand that acquirers are primarily interested in future earnings and growth potential of a business. The best way to highlight a company’s ability and potential for growth is through appropriate detailing of historical financial performance as well as future projections – it’s a much ‘easier’ task selling a company showing growth and a good performance track-record than one that doesn’t.
Showing sustainable growth in respect of sales, profits and cash is an important demonstration of a business’ strength; however, simply increasing sales by cutting margins doesn’t necessarily paint an attractive picture for potential buyers.
Of course, in a number of cases, this is much easier said than done, and if it’s not possible, ask yourself if there is a good story to tell about the current resilience of your company? This could be a means by which a new owner can create further growth.
Having confidence in the future of your company, despite you not being there, could entice a potential buyer into delving deeper into the opportunity to acquire your company, so it’s important you have an understandable explanation for selling. Demonstrate to the potential buyer that selling your company is an ‘option’ and not one based solely on financial necessity.
Ambitious financial projections are important for a successful sale, but even more important is that they must be realistic and achievable. These projections need to be explained clearly and could be achieved through capital investment, skills and contacts – aspects the potential buyer may have but the present owner may not.
The next instalment in our blog series will discuss the importance for business owners to reduce dependency on customers, suppliers and staff. Stay tuned.