Increasing your company valuation starts here
Selling your business one day and having a euphoric outcome is a dream only a few ever achieve. This is a good time of year to be thinking about the campaign your company should prepare to work in the new year to build your company value, or worth. Although selling a company one day is a mystery to most owners because they’ve never experienced it, there is a formula that I share with those that I meet with.
Proven Successful Exit Formula:
Future Euphoric Exit = Financial Performance Trend + Stickiness + Pricing Authority + Outlook
This formula is simple in concept, but heavy lifting is required in terms of planning and executing. And it takes time which is why you want to be thinking about your worth building campaign as early as possible. Here is a little more detail on each aspects of this powerful formula:
Financial Performance – this is the first area a future acquirer will want to look at. They will be drawn to your company because of its product or service but they will quickly want to see how attractive it is to your current customers via your financial performance trends. Are you taking the steps to build your financial performance so you would be able to show at least three years of upward trending financial results?
Stickiness – this relates to how important your company is to your customers. Are you taking the steps to develop and position your product or service to be so important to your customers that even if you tried to get away from them, they would stick to you like glue? Acquirers place premiums on businesses that are unique, not easy replicable by competitors and that are very sticky in relationship with its customers.
Pricing Authority – if you’re able to translate stickiness with your customers in to having pricing control that allows you to command a solid profit margin, you enter a realm few businesses do and that could excite a future acquirer to consider paying a premium for your business. Are you taking the steps to develop and execute on a pricing strategy that leverages your customer stickiness and puts you in the driver seat in terms of the pricing you can command in the market?
Outlook – an acquirer will ask themselves whether your business is yesterday’s news or whether it is tomorrow’s news as well. Any acquirer excited about your business because of the prior 3 elements to this formula will look to this fourth and if they see it, a possible future euphoric exit outcome certainly awaits you. Are you taking the steps today to build the case for a positive future outlook in areas such as a robust sales model, sales opportunity pipeline and new product/service roadmap?
Building a business to one day deliver a euphoric exit event is a dream many owners have but few will realize. Those that do realize it developed a campaign and executed well. My advice to owners, think about this formula for your campaign to build the future worth of your business because doing so will very much increase your chances of one day achieving a future euphoric exit.
