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Your Company Revenue Impact on Exit Valuation

Wear the glasses of your future acquirer in assessing the quality of your revenues

Not all revenues are of equal value when it comes to the view your future company acquirer will take as they determine what value to place on your business. A few years prior to an exit, put on a potential acquirer’s glasses and ask yourself and your leadership team these questions:

  • Is our overall company financial performance reliant on one or a multiple of revenue streams? (e.g., one product or service or multiple ones?) Sometimes a single source of revenue can be viewed as higher risk to an acquirer versus seeing a diversified portfolio.
  • What is the predictability of our revenue stream(s)? Acquirer’s assign higher valuations to those businesses with more predictable revenues. Think about what you could do to take all or some of your revenue and move it to being highly predictable such as through multi-year customer purchasing agreements, preventative or predictive type services you could offer or even a software application that you could get subscription and maintenance fees from.
  • Do we have good diversity of customers, so your revenue isn’t too heavily reliant on a small number of customers? Generally, acquirer’s will see risk when more than 15% of your revenues are coming from a single customer.
  • Do we know the gross margin performance related to our revenue stream(s)? An acquirer will want to understand the profit margin you get specific to each revenue stream. If your company revenues come from multiple products or services, be able to present your future acquirer the gross profit you derive from each.
  • Do we have good line of sight to future, ongoing revenue growth? Acquirer’s will many times wonder if you are wanting to sell your company because you believe it’s nearing the end of its growth potential. To reduce this concern, be able to show that you have a sales opportunity pipeline filled with remaining growth potential so that under their ownership, the positive performance of your company can continue.

The bottom line is this – don’t be focused on just the total revenue of your company but pay equal attention to the quality of it. Acquirer’s will assign very different valuations to two businesses with similar total revenue levels but the one with a higher quality of revenues is likely to receive a much higher exit valuation. This could lead to one seller being unhappy with the outcome of selling their company and the other being euphoric. Get the plan in place today to be one of the euphoric sellers in the future.

Use Greenpoint Testing to Achieve Your Desired Exit Valuation

It only takes 106 questions, scanning 10 essential business functions, to stress test your readiness for a successful exit.

However, these questions require thoughtful commitment to achieve your desired exit valuation.

During this up to hour-long online testing, you'll see questions such as the following.

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Then, complete the Greenpoint questionnaire to unlock your personalized report, which will reveal any gaps in your planning, pointing to the action steps needed to maximize your desired exit valuation.

Format: Digital

Delivery method: Email

Report included: Your Greenpoint results

Stethoscope Frees You to Work On Your Business, Beyond In It

120 questions, scanning 10 essential business functions, free you to work ON your business, rather than solely IN your business.

With each question requiring thoughtful commitment to identify opportunities to further your success.

During this up to hour-long digital Q&A, you'll see questions such as the following:

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Complete the Stethoscope questionnaire to unlock your personalized report, which will expose gaps [if any] in your planning, and tips for future growth, resulting in action steps needed to maximize your thinking as a business leader.

Format: Digital

Delivery method: Email

Report included: Your Stethoscope results

Be Ready for The Probe of Due Diligence

109 questions, scanning 10 essential due diligence disciplines, to prepare for a roadblock free Probe of your business in anticipation of sale.

And to potentially increase the value of your business by your professional transparency.

With each question requiring thoughtful commitment to identify opportunities to further your success.

During this up to hour-long digital Q&A, you'll see questions such as the following:

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Complete the Probe Diagnostic Tool questionnaire to unlock your personalized report, which will expose gaps [if any] in your planning for a due diligence Probe, resulting in action steps needed to maximize your readiness when diligence is due.

Format: Digital

Delivery method: Email

Report included: Your Probe results