A valuation is not about determining what a company is worth to the present owner, it is about evaluating the company’s transferable value. Evaluate your company through the eyes of a potential buyer. From that perspective we will ask you to focus on 10 value enhancing elements. Each element is a characteristic of a business that either reduces the risk associated with owning the business or enhances the prospect that the business will grow significantly in the future. The better your performance in these areas, the greater the probable selling price of your business.
Value Element #1: Stable and Predictable Cash Flow
Value Element #2: Quality of Financial Information
Value Element #3: Customer Diversity
Value Element #4: Growth Potential
Value Element #5: Human Capital / Quality of Workforce
Value Element #6: Operating Systems and Procedures
Value Element #7: Facility and Equipment Condition
Value Element #8: Barriers to Competitive Entry
Value Element #9: Service / Product Diversity
Value Element #10: Goodwill
Just as a runner might get a physical to determine their preparedness for a marathon; you should also measure your Company’s fitness for the marketplace. A valuation is an unbiased examination of your company’s marketability and helps you pinpoint where your company is in its business cycle. It is the foundation, the bread and butter, on which a business owner can determine their readiness to sell.
Unfortunately, few owners ever take the necessary steps to plan their exit and end up selling because of unexpected events or crisis-driven reasons rather than on their own terms and timeline. Seek the advice of a CPA, attorney and CBI one to three years before you plan to exit the business.
Edward Valaitis – Certified Business Intermediary (CBI) and member of IBBA (International Business Broker Association) and Business Brokers of Florida. He has more than 26 years of extraordinary experience building, managing, and leading high quality professional service firms. 800.975.2114