In our eBook Partners in Your Business, guest contributor Gareth Banks from Champ Ventures explained how private equity works and what sort of opportunities private equity investors look for.
This blog comes from Chapter 1 of the eBook, in which Gareth answers the following questions:
- What is private equity and how does it work?
- What type of business opportunities does private equity look for?
- As a business owner, how can I benefit from private equity?
- As a private equity investor, what affects your appetite to invest?
- As a business owner, how do I become private equity ready?
- Where do I go for more information?
growing your business,
Valuations are extremely useful management tools for business owners looking to maximise their current business performance and long-term value.
A valuation can help you identify what you are currently doing that is:
a) adding to your business value, and
b) detracting from that value.
My advice is that, if your business is greater than five years old, you should have it valued on a reasonably regular basis, say every 2–3 years depending on your growth track and the external environment the business is experiencing.
Buying a business is not an investment decision to be rushed into or made lightly.
For those of you considering buying a business, we have created the Business Buyer's Checklist.
The checklist contains 14 questions designed to:
- ensure you have a clear purchase objective
- work out whether identified business opportunities are a good match for your skills and interests
- prompt you to take necessary steps regarding market appraisal, due diligence and financing.
Buying a business,
If you’ve been reading my blogs for a while now, you know I love a well-written business plan.
I encourage my business advisory clients to write things down, even in a summary sense, because it’s a good way of pressure testing your objectives and communicating them to your team.
Despite my penchant for written plans, I do know successful business owners who don’t write things down and still manage to be supreme at operational and business planning.
They do, however, employ a number of other important techniques, some of which we’ve summarised in the following cheat sheet:
annual business plan,
A few years back the JPAbusiness team facilitated the sale of a business involved in import and distribution.
It was a well-known, independent brand that had been established for well over 50 years and had solid bottom-line performance.
Unfortunately, when it came time to exit the business, it soon became apparent there was too much inventory (stock on hand).
We negotiated a price for the goodwill, plant and equipment etc, based on a multiple of Business Maintainable Earnings (BME), which is essentially the cash flow of the business.
Then it was time to address the stock value.
Selling your business,
selling a business,
cash flow management
We all want competent, confident staff who feel fulfilled and motivated by their work – as we've discussed in previous blogs, it's a win-win that provides benefits for both the employer and employee.
Training and professional development is key to staff developing that competence and confidence, so this week we're inviting you to download our free JPAbusiness Staff Training Plan and Professional Development Plan templates.
Don't let COVID-19 derail your training plans
As we move through an uncertain FY21/22, business owners and managers may be tempted to think now is not the time to prioritise staff professional development needs. I believe the opposite is true.
Training and Professional Development,
training and pd
Based on our years of business transaction experience – and successfully making a match between many buyers and sellers – answering ‘yes’ to the following questions is critical to setting you up for a successful business transaction:
- Price – Is the price market-related and does it reflect the value a willing buyer, under the circumstances of the sale transaction, will perceive as fair?
- Facts – Are the facts on the business or opportunity clear, unambiguous and relevant to the risks, issues and opportunities the risk-taking party will likely perceive in making the purchase? Have these facts been collated and presented in a professional Information Memorandum/Business Profile?
Buying a business,
selling a business,
selling my business
Most business owners only seek a business valuation after being prompted to do so by a significant ‘event’, for example family break-up, retirement, need for business restructuring, bank lending requirement, purchase offer and so on.
My experience indicates the opposite course would be better: valuation should be considered a management tool and be done before, and separate from, such business and emotive life events.
The following case study shows how an independent valuation, carried out early, would have made life a whole lot easier for one of my clients.
Instead this client found themselves in a credit squeeze with little understanding of the true value of their business to potential financiers and the drivers that really matter to external parties.
client case studies
In this blog we’re sharing information and case studies first presented by Watson Mangioni lawyers David McGuiness and Fleur Gibson in our eBook, How to conduct due diligence when buying a business.
Please keep in mind the material in this blog is not advice and should be regarded as a general guide only.
What is the purpose of legal due diligence?
Comments by David McGuiness and Fleur Gibson
Watson Mangioni Lawyers Pty Ltd
The purpose of legal due diligence is to enable an intending purchaser to assess the legal risks associated with either a business or a company, in order to make an informed decision as to whether they will proceed with the transaction and, if so, on what terms.
Where issues are thrown up during legal due diligence and the buyer still wishes to go ahead, they may renegotiate the purchase price they’ve initially offered and also request additional warranties from the vendor.
Buying a business,
due diligence checklist,
legal due diligence
This blog comes from one of our most popular eBooks: Brand and Corporate Identity for Small to Mid-Sized Businesses.
The eBook was written with business branding experts Richard Amos and Mike Wilkinson.
What’s in a brand?
Comments by Richard Amos and Mike Wilkinson
We often talk about brand as a relationship, or a connection, between an organisation and its customers – it is the connection your business has with your customers’ minds.
A brand is the sum of all you say and do in relation to your products and services, plus consumers’ personal experiences with these.
Brand and marketing,