Understanding how a future acquirer will value your business is key to a euphoric exit outcome
There are multiple ways of valuing a business but for most acquirer’s, it’s the future value of the cash flows of your business that will be the starting point for how much they are willing to pay you for your company. The misconception by many private company owners is if they have good revenue and good profit then an acquirer will pay them a premium at time of acquisition. Although having historical and projected strong revenues and profits is a great ante into the game of selling your business, it’s not the only thing that will determine whether the acquirer will be willing to pay you a premium.
Every industry is unique so ensure you understand how a future acquirer within your industry is going to place a value on your business. This isn’t something you want to wait to find out only to learn you missed key value, or net worth, drivers in the eyes of an acquirer. Begin thinking and planning today for what the future of your company cash flows will mean for your exit event. Let time be your friend in this regard as you can take steps today to improve your future cash flows and increase the likelihood of one day achieving a euphoric exit event with your company.
