A Company Valuation Provides You with More Than Just a Number!

Have you ever looked forward to going out to a restaurant, only to be seated at a dirty table and placed your arm in someone else’s pancake syrup? It always makes you wonder what the kitchen looks like, given that this is how the owner cares for the part of the business that customers actually see. This can be a sign, from the customer’s perspective, that the business may not be well-run, is not the kind of company you want to patronize, is not the kind of company you want to work for and is definitely not a company you would consider buying. 

The bottom line is that a potential investor’s perception is their reality.

Considering the time and energy you have invested in growing your business, the missed time with friends and family, the long hours, and the sleepless nights, when you decide it’s time to sell, you want to maximize your value in a professional and confidential transaction.   Many business owners have fallen into the cycle of spending more “time working in a business” versus “working on the business”.  As you think of exiting your business, it is critical that you are working to optimize the business while laying the foundation for a successful sale.

Let’s be clear, buyers don’t expect to buy a perfect business; they already believe they have a vision for the business and the expertise to grow profits. However, they want to buy a well-run and managed company. Having your house in order by knowing your numbers and presenting it to the market in a professional and defendable manner provides potential buyers with confidence that the business is well run and organized. This is where starting with a proper business valuation benefits a business owner.

A professional independent valuation of your business is a critical first step when formulating your exit strategy.  Knowing the fair market value of your company will help you determine if now is the right time to sell and what to expect from the transaction.  It identifies the positive value drivers of your business as well as areas for development.  You will then be able to use that information to build a plan before starting the process of selling, thereby maximizing future value.

The obvious benefit is knowing the value, the deal structure and setting a fair market price; however, there are several additional benefits to starting the process with an independent professional valuation.

• Establishing a relationship with an M&A advisor that will guide you through the process from the initial valuation to the final sale.
• Understanding the value drivers behind the valuation, giving you the insight into addressing them to maximize value.
•  Identifying and mitigating areas of risk in the business that can limit value and marketability.
• Evaluating various deal structures that work best for your immediate and long term planning.
• A review of the valuation report with your trusted tax expert will allow you to properly execute the proper tax planning to maximize your after tax return;
• Presenting an accredited valuation to potential investors, shows the seller’s professionalism and seriousness in selling a business immediately reflecting the “quality” of the business;
• Finally, an independent valuation gives the seller control – it is your business, and you should have the ability to manage the best outcome.

So, one can see, like the dirty table at the restaurant, a lack of attention to simple details like this will leave the wrong perception for potential investors.

At A. Neumann & Associates, we provide a complimentary valuation updates within 2 years, if now is not the time to enter the market. Further, if we represent you, all valuation costs are credited back to you at the time of transaction closing.