It’s a fact of life (and death) that eventually all of us will have to exit our business one day.
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 & really 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?
Nobody would choose to leave their loved ones with more hassle to sort, when they are dealing with bereavement anyway. 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? Well, there are obviously many different factors. Some sector-specific, and some quite typical across all industries.
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.
This may surprise you!
Would you rather receive 2.93 or 4.49 multiple of your profits when you sell?
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 in their companies 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 multiple went up to 4.49.
Companies where the founder knows each of his/her customers by first name received much lower offers. Often just 2.93 times pre-tax profit.
Clearly, 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.
You may not be in that position at the moment. But we can still help with ideas and strategies that may allow you to move towards that position. Perhaps in the coming months and years.
And that’s just one of a number of areas we’ll look at if we conduct our unique 1-2-1 Exit Planning Workshop with you in the New Year.
Please contact us for more information.