Most owners undersell their businesses
Many owners we meet actually undersell their business because they did not think to make it a more attractive proposition one or two years before wanting to sell it.
Do you want to achieve a premium price for all the years of work you have invested in your business?
Assuming the answer to this question is yes, then you might like to know that with careful planning you can significantly increase the value of your business. In general terms what you have to do is start by carrying out out basic improvements but at the same time strengthen the competence and self-sufficiency of your management team.
This sort of longer term pre-sales preparation ensures that you embed “real value” within the business.
The four key sales factors needed to maximise capital value
When it comes to putting your business up for sale you can optimise the price by having 4 key sales factors in place:
Firstly, Make yourself dispensible. Who wants to buy a business that then collapses because of the departure of the previous owner? An idiot. So unless you have a good supply of idiots lined up make sure the business is no longer dependent on you as existing owner. This also applies to any other key persons who are indespensible who might subsequently leave when the new owner takes over.
This means that you must have a robust, experienced and self-sufficient management team able to give any new owner the confidence that the profitability of your business is sutainable after your departure and without your personal intervention. This factor alone reduces the risks for a purchaser and often increases the price they are willing to pay.
Secondly, it really is best if you have a clear track record of remorsless performance improvements driven. You need to demonstrate that your existing team is proven to be able to identify both waste and opportunities and translate this into workable action plans to improve profitability.
Thirdly, and leading on from both factors one and two, the existing management needs to have ongoing operational action plans already in place designed to make specific improvements and grow profitability. The all-important point here is that these action plans need to have the enthusiastic buy-in and commitment of all the staff.
Fourthly, the company needs to have a well-thought through long term strategic plan. This plan must identify all the risks and opportunities confronting the business and have the buy-in of all the staff. Importantly the planning needs to be integrated into a minimum of three-year financial forecasts. These forecasts must detail the precise financial implications of each projected performance improvement.
All other things being equal, if your business has these four key sales factors in place you will be better able to attract a potential buyer. The eventual price they pay will reflect this.
But the time to start is at least two years before you are thinking of selling.
Quite simply, if you leave things to the last minute you will depress the value of your own business considerably. Is this the sort of poor return you want after all the years of your life that you have invested in it.
For a successful disposal you need to demonstrate the future potential of your business.
TBD Ltd is partnering with corporate finance specialists to deliver a Pre Disposal Assistance Programme (PDAP). This is designed to help you build the four key sales factors into your business to help you achieve the best price when you come to sell on.
The PDAP will show you how to:
- Introduce team-planning methods that create improvements across every area of your company and simultaneously impact all four profit-drivers; increased sales volume, increased sales prices, reduced unit costs and reduced overheads
- Use rolling forecasts as a business tool rather than just a discrete, or annual exercise. Rolling forecasts greatly assist both strategic planning and the integration of improvements into existing operations.
- Develop the corporate structure to ensure maximum optimisation in the event of a disposal
The PDAP process aims to
- accelerate change and innovation
- drive out inefficiencies and minimise waste,
- stimulate performance improvements and exploit opportunities
- develop your management team and of course
- increase your profits
Using TBD's unique ability to improve all four profit-drivers all at the same time has a powerful effect on profitability. The compund impact of improving all four profit drivers combined with the financial restructuring of your company will greatly enhance the capital value of your business.
If you think that you may be selling your business in the not too distant future and would like to learn more about TBD or the PDAP process contact Jeremy Old on 0845 0945 819 or email
See our case studies for more details of TBD's potential to transform your business profits