Optimizing the value of your company during the sale.

Key tips to implement.

The sale of a company represents a crucial step for entrepreneurs concerned with maximizing the return on investment and human dedication put into their business.

In this article, we will explore in detail several key points that can positively influence the value of your company during the sale. Key areas to address in preparation for the sale.

We consider the exit as a step to be meticulously worked on in the entrepreneurial journey. Planning this step carefully is essential.

Empower Your Structure to Facilitate Business Transition:

To enhance the value of your company, it is imperative to implement a strategy aimed at empowering your structure. Several key points need to be considered to organize the company to ensure its smooth operation without relying exclusively on the leader:

Ensure current operations and business continuity through well-defined processes.

Identify key employees and enhance the skills of those who will remain post-transaction.

Analyze the leader’s intuitu personae towards clients, suppliers, influencers, etc. Work with your advisor on pre-solutions to “disintuitu personae” the structure, reducing potential earn-out.

 

Financial/Accounting Aspect in Business Valuation:

The Gross Operating Surplus (EBE), a metric closely related to your company’s cash flow capacity, serves as a standard underlying valuation factor. To work on your valuation, identify several actionable levers (non-exhaustive list):

A- Revenue:

  • Diversify revenue sources.
  • Diversify distribution channels.
  • Strategize upselling.
  • Increase your partner and influencer base, etc.

B- Expense Categories:

  • Enhance profitability by client.
  • Analyze expense categories with the highest impact on your income statement and competitively engage suppliers.
  • Eliminate unnecessary expenses, etc.

C- Business Model:

Consider integrating a recurring dimension into the business model to strengthen its valuation.

Ensure quality financial management, supported by robust management control and relevant KPI monitoring.

Anticipate and resolve disputes or litigations upstream of the process.

 

Presenting Growing Aggregates: Selling at the Right Time:

Maximizing your company’s value involves presenting growing aggregates. Recognizing the ideal time to sell by capitalizing on progressing aggregates is crucial. To ensure optimal valuation, leverage:

  • Significant increases in revenue.
  • Improved profitability.
  • Growing figures as essential underlying elements to generate interest from potential acquirers.

Demonstrating sustained improvement over a period of 2 to 3 years with these aggregates will build trust with potential buyers.

 

Presenting Your Asset:

A quality presentation optimizes the sale. To stimulate offers, highlight your competitive advantages:

  • Spot analysis of your company (organization, history, resources, skills, key figures).
  • A three-year value creation plan to help the buyer project the company’s ability to generate value. Work with your advisor to tangibly transpose these elements into a detailed business plan, providing buyers with a clear view of the cash flows your company can generate.

Concurrently, to stimulate demand, actively consult with a maximum number of acquirers. This proactive approach ensures extensive market visibility and attracts a diverse range of interested buyers.

 

Competing Potential Buyers: Your Advisor is an Asset, Not an Expense:

Competing potential buyers is essential to optimize the value of the sale. It’s important to note that your advisor is not an expense but rather a profitable investment that creates value. Establishing a process creates a competitive dynamic to:

Increase the intrinsic value of the company through the power of the auction process itself.

Solicit acquirers you may not have initially considered, requiring a thorough analysis of the value chain and expanding the range of possibilities.

Ensure the success of the operation by capitalizing on the expertise of seasoned professionals. Their advice avoids mistakes, maximizes opportunities, and guides the process to ensure a successful transaction.

 

Engage with Market Stakeholders: Enhance Visibility for Increased Opportunities:

Engaging with market stakeholders is a key element to favor the success of an exit; your company’s reputation plays a crucial role. To maximize visibility in the sector, consider three key points:

Investment in Strategic Marketing Expenses:

Public relations, natural referencing (SEO), online advertising (SEA), etc., contribute to building a strong reputation in the sector.

Participation in Sector-Specific Exhibitions:

These offer a platform to interact with competitors and other stakeholders in your industry. Facilitate networking, open opportunities, and strengthen the positive perception of your company.

Establish Partnerships with Ecosystem Actors:

Creating deeper relationships by partnering with ecosystem actors. When acquirers are familiar with the company, understand its personnel in terms of skills and corporate culture, as well as its potential, they are more confident in making an offer.

In a nutshell:

Various levers can be activated to promote the success of a transaction.

At OutMatch, we offer a free diagnostic designed to facilitate your exit, to be conducted 2 to 3 years before the sale. This comprehensive diagnostic is based on the assessment of more than 50 essential levers that need to be activated.

 

Last articles:

Value Creation Initiatives (Episode 1): Retail with the Steak & Shake Case Study.
Value Creation

How to Successfully Execute a Turnaround Strategy.

SMEs, ETIs, how to analyze your market and establish your competitive advantages to perform?
Strategy

Where we discuss key success factors, blue ocean strategy, VRIST method, etc.

About proportional civil liability.
Disputes

Belgian joke or new paradigm?