Value drivers are the key to getting the results you want from a business sale. When it’s time to sell your business, work with an experienced investment banker to start focusing on value drivers that will give your deal significant appeal. You may need to take time to implement or improve on them before sales pitches begin. Either way, here are four important value drivers from the team at Kratos Capital.
One of the factors that you really don’t have control over is the actual market where your business lies. Working with a sell-side M&A advisor before starting the sales process will allow you to conduct an in-depth analysis of the current industry market and where your business lands in the big picture. This analysis will answer important questions buyers will ask, such as:
- Barriers to entry in the market
- The ideal customer for your business
- The loyalty of your customer base
- How the competition measures against your business
Before the sales process begins, ensure that you have the most up-to-date financial information available for potential buyers. Work with your M&A team and CPA to collect financial statements and to review the financial strengths and weaknesses of your business. You may have an idea of how the financials impact your business’ value, but a closer look at the numbers can sometimes tell a different story.
Key Performance Indicators (KPIs) are value drivers that measure your company’s performance against the performance of your general industry and local competition. Review these KPIs before putting your business on the market:
- Customer Retention
- Employee Retention
- Revenue Growth
- Business Processes
The goal of showcasing your KPIs is to prove to potential buyers that your business has growth potential. They provide buyers with a relatively clear indicator of how the business will perform after an acquisition. In the eyes of a buyer, if your business isn’t on track to increase in value and profitability, it’s dead in the water. So, having the right investment banker on your side will help you find the positives in your current KPIs and give you the negotiation tactics to prove to your buyers that your business is worth their investment.
It can be easy to determine the value of tangible assets like equipment and your building. However, intangible assets require a closer look when aiming to increase value. Your company’s intangible assets are some of the key elements that make it stand out from the crowd. Not only can they be appealing to potential buyers, but they can also boost your value as well as the price of sale!
An M&A advisor will be able to help you understand what intangible and proprietary assets your business has and how influential they are for your overall true business value. These assets usually include:
- Unique Technology
- Unique Business Processes
Make the Most of Your Business’ Value with Kratos Capital
Kratos Capital helps sellers achieve maximum value for their business. If you’re ready to exit and make a profit on your life’s work, we’re ready to start our process with you. Contact us today for a confidential consultation.