There are a number of ways to make your business worth more...
Make your business more valuable
In order to make your business more valuable, I think you need to look at a couple of areas.
Firstly, a lot of people think that when they want to try and sell their business, they do it right at the end of the cycle. What I think you should be doing is looking to try and build your business at all periods. So you should look to build your business to run as well as to sell. I think that’s important for the next two areas that I’m going to touch on.
The next area that I think you need to consider is you need to do a bit of work in looking at what types of multiples are being sold within your space. Businesses can sell at a various number of multiples, sometimes between five or maybe up to 10 or 15 if you’re in a technology space, and it’s important you understand what criteria the businesses that are selling at a high multiple within your space, what attributes they have so that you can then try to aspire to those within your own business.
The next area I think you should consider is trying to work out the types of businesses that are likely to buy your company. Now that could be either private equity or it could be a trade sale, but if you’ve got an idea in the market place about the areas within a business that is looking to buy you, where there are weaknesses or specific areas where they are looking to strengthen, then you can start to migrate your business to make it very attractive to a potential trade sale or whatever private equity angle you wish to go down.
My final point is around dependency and I think a lot of people that are looking to sell their businesses end up getting an under value or not maximising their enterprise value because there are certain dependencies in the business. Now that maybe the owner, it could be a supplier, it could be a customer. We find it’s predominantly the owner that is the majority of the dependencies within the businesses that we sell and therefore the owner can look to build along a better management team or a second tier of management underneath him, then he can remove that dependency and look to maximise the value that he would get from his business.