Oh hello!
I’m back to talk about the drivers of business value. (Of course!)
Today I’d like to focus on a few of the drivers, with the help of Todd Perry, Vice-President at Kehoe Marine Construction. This is part of a 5-week deep-dive into value building in your business in the form of a ‘masterclass’.
Cash Rich Exit Ideas for Business Owners
This is defined as the likelihood to grow a business and determine the growth rate for the future, which prepares brands for a cash-rich exit when selling to third parties. It is one of the 8 company value drivers that help to make an impression on business acquirers.
Todd says that it's a good idea to have more shareholders in a business because there are others who worry about the same things! However, you must remember that shareholder expectation management becomes real when a business has plenty of shareholders. It is essential to have a concrete cash-rich exit plan to secure the financial freedom that you’re planning for.
Todd recalls how he wanted financial freedom before age 50. This helped him to solidify the business handover. He says, "I was 43 or 44 at that time. So that gives me three or four years to really bundle this thing up and make it just an awesome business that somebody could walk in the door, look at our books, look at our clients, look at our staff turnover and culture and say ‘that's a well-run business’."
Remember the importance of a disciplined business
If you are a business owner or co-founder, it is essential to determine the equity structures in your business early. Business owners and co-founders are often tempted to retain as much ownership of a brand as they can, and bank the dividend checks. They may even want to sell little bits and pieces of shares from time to time. That is not a good plan in the long run.
If an employee-owned company cannot get equity out of the business, then the most profitable path ahead may be to stay on track to sell controlling interests to private equity firms or strategic consulting engineering firms.
To remain a disciplined business, record-tracking is crucial to impress acquirers. New owners want to retain corporate knowledge regarding business operations, management, data management, cash flow history, and the other main drivers of company value.
Now let’s move into another key driver of building business value
Pre-Sale Business Assessment for Co-Owners
Business consulting firms and external board members are very helpful to assess and evaluate company value drivers for a business. Since third-party agents or members are not a part of the business, they offer a plethora of unbiased and professional perspectives.
Experts in the mergers and acquisitions sector understand the financial statements of a business within minutes and have opinions too, so seek them out. They come up with agile questions about business management and operations for optimal brand profit. External agents or consulting firms conduct Pre-Sale assessments for companies that help employee-owned businesses understand if the company can profit from the equity of the company or sell their controlling interests to third parties. The Pre Sale business assessment helps business owners and co-founders to attract new acquirers and close a business deal successfully.
For more information on business Presale assessments or to get a Pre-Sale report for your company, please listen to Todd Perry's conversation with Colleen O'Connell-Campbell.
https://iamamillionairesonowwhat.libsyn.com/ep222-lets-chat-pre-sale-assessment-and-cash-rich-exits
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