Maximizing Value in a Corporate Sale: Quality of ManagementMarch 4, 2018
You are a CEO. You lead a successful business you share numerous qualities with your peers. Among them, being somewhere between bright and “whip-smart”. You turn ideas into reality. Your leadership has a direct impact on your company.
Selling your company will be one of the most important financial events in your life. Maximizing value in that sale is critical to all stakeholders.
You approach me as an investment banker who sells companies and ask “What’s my multiple of – EBITDA or Revenue or Book Value?” How do I get maximum value when I sell? What are you going to do?
Some M&A professionals, your lawyer or accountant would gladly answer those questions.
BUT …. you are taking the wrong approach to maximizing the value of your company in a sale.
The same characteristics that make you a successful CEO will allow you to maximize value in the sale of your company.
As your investment banker, my job is to present your company’s value proposition to appropriate potential buyers in a clear, compelling, accurate manner. This will allow them to perceive its value. From that perception, we can negotiate price and terms. Accuracy is critical: You must assume EVERYTHING will come out in due diligence. If any representations are proven false in due diligence, or material omissions arise, you will undermine credibility on every aspect of negotiations.
This series of articles will demystify the process of maximizing value in the sale of your business and explain how you, as owner and/or CEO, control that outcome.
The premise of these articles is that two things determine the value of a business:
- Quality of Earnings – Is profitability from your core business sustainable?
- Growth Potential – Whether your market or industry are growing, static, or shrinking, does your company have the ability to grow at an above-average rate; are you better than mediocre.
The next six installments of this series will discuss the most import factors in maximizing the value of your company by creating upside or risk to your company’s quality of earnings and growth potential:
- Quality of Management
- Quality of Strategic Planning
- Business Concentration Issues
- Business Infrastructure
- Financial capacity, controls & reporting
All of these factors are controlled by you as owner and CEO.
Tune in in two weeks for our next segment.