Most businesses that go to market don’t sell, largely because they’re not attractive enough.
How can you get top dollar for your business? We use the tested and trusted Value Builder System to help business owners discover steps to improve their business value. Improving your Value Builder Score may more than double your pre-tax sale price.
Watch the video below, or read on for more information:
We use the tested and trusted Value Builder System to help business owners discover steps to improve their business value. When we work with a business owner on their succession/exit plan, we ask them to take a really quick survey, and we look at eight drivers of value in a business.
We look at financial performance, growth potential – are there customer concentrations? Profitability is part of the equation, growth is part of the analysis.
There are a lot of financial factors and non-financial factors, but the key is to what we call “de-risk the business.” The less risk there is from a buyer’s perspective, the higher the multiple of your earnings the buyer is willing to pay for your business.
The value builder assessment gives an individual score in the eight value driver areas, and it combines all of those driver values into one main score. You’re ranked on a 1-to-100 score basis, and then it calculates an estimated value for your business. The report also provides details on each of those eight drivers.
Within those drivers, our assessment will give a list of opportunities or ways that a business owner can improve the value in that particular area. We can play with the assessment and show an owner that if they increase their score in an area by say 10 points, it increases their business by $100,000. It's a malleable assessment.
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There are several benefits. There's a monetary benefit, which is if my business is worth $3 million today, maybe it’s worth $5 million 36 months from now. So there's financial maximization.
There’s also trying to match up the attractiveness of the business with the readiness of the owner to move on. Sometimes an owner will sell a business, and they have no plans for what they do once they’re not involved in the business.
One year later, 75% of business owners regret that they sold their business, because they either feel they sold it for not enough, or they just don’t have anything that fulfills their day, like going to the office and being involved in business did.
An improved value builder score can lead to more than double pre-tax profit in a sale. Those are the statistics. And with an improved value score over 90, you're twice more likely to have written offers when you’re ready to sell.
Andrea Brady, CPA, CEPA, and Andy Kahn, CPA, MBA, CFP, CEPA, are Certified Exit Planning Advisors and lead Concannon Miller’s Exit & Succession Planning Team. Learn more about our Exit & Succession Planning Services here.
