5 questions for business sellers to help maximise value on exit

Posted by James Price | JPAbusiness on 03-Mar-2021 02:00:00

Q.1 Do I really want to sell my business and, if so, why?

  • Do you want to sell because you’ve had the business for five years and the results have been poor?
  • Do you want to sell because you’re over-exposed to borrowings, your cash flow is tight and you can’t see a way to get ahead?
  • Do you want to sell because it’s time to retire or move on to the next stage of your career?

Your reasons for selling will help you create a negotiation framework to determine what an acceptable offer might be, so it is critical you be honest with yourself when answering this question.

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Topics: Business Value, Selling your business, Advice, Business transfer, selling a business, Business advisor, business broker, James Price, JPAbusiness, Parramatta, Central West NSW, business sale transaction advisor, business transaction advisor

How to use succession planning to boost business value [template]

Posted by James Price | JPAbusiness on 10-Feb-2021 02:00:00

Succession planning is the process of identifying and developing internal staff who have the potential to fill key business leadership positions should existing leaders – including yourself – leave the business.

It’s about creating a back-up system for your people resource and it should start the minute you take on a business’ ownership, whether you buy it or start it from scratch.

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Topics: Business Value, Business Planning, Template, Succession planning, business advice, Business advisor, James Price, JPAbusiness, Parramatta, Central West NSW, business succession, scorecard

3 questions to ask when valuing a business [infographic]

Posted by James Price | JPAbusiness on 09-Dec-2020 02:00:00

Business valuation is not an exact science and nor is it a simple science. However there are some factors that should always be considered when assessing a business’ value.

They are:

  • repeatability of current earnings
  • availability of information on the business’ performance and business model
  • point of difference and competitive advantage.

We've created the following infographic to help you get started on assessing the value of a potential purchase opportunity.

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Topics: Business Value, Advice, BME, infographic, business advice, Business valuation, Business advisor, Business maintainable earnings, James Price, JPAbusiness, Parramatta, COVID-19, coronavirus, Central West NSW, business transaction advisor

Why building sustainable business value is a marathon, not a sprint

Posted by James Price | JPAbusiness on 25-Nov-2020 02:00:00

One of the lessons I’ve learnt over 35 years of running my own businesses – and also advising on and observing others – is that very little value is generated in a ‘fast foot race’.

Good things come from time, careful execution, trial and error, and patience.

I'm spending a few hours in the gym these days trying to tone and trim up a bit. As a tall guy who’s less than perfectly coordinated, there are some exercises that are a bit of a challenge – barbell squats for one. My form is not a picture of symmetry and grace.

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Topics: Business Value, Business Planning, Succession planning, business advice, Business valuation, Business advisor, JPAbusiness, Parramatta, Central West NSW, business transaction advisor, sustainable value, business sustainability

Do I need a valuation before selling a business? [video]

Posted by James Price | JPAbusiness on 26-Aug-2020 02:00:00

The simple answer is ‘no’, you don’t need a valuation to sell a business.

However, in terms of engaging JPAbusiness to sell your business, the answer is ‘yes’: we always recommend clients have their businesses independently and professionally valued before they invest time and money in a sale process.

In this video I explain how our first experience of helping a client sell their business – combined with our many years of subsequent experience – has shaped this philosophy regarding valuation and its role in a successful sale process.

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Topics: Business Value, Video, business advice, selling a business, Business valuation, Business advisor, Business selling, JPAbusiness, Parramatta, client case studies, Central West NSW

What are some 'rules of thumb' for valuing a business?

Posted by James Price | JPAbusiness on 22-Jul-2020 02:00:00

When it comes to valuing businesses – listed or private – you will often hear people refer to ‘rules of thumb’. Some will say the value of a business is:

  • ‘x times its revenue’ or
  • ‘x multiples of its earnings’ or
  • ‘a function of its after-tax profit’ or
  • ‘a function of its gross profit’ and so on.

These ‘rules of thumb’ tend to be industry based i.e. “a business in Industry A is worth ‘x’ times multiple of earnings” while “a business in Industry B is worth ‘x’ times revenue”. (I won’t repeat the actual ‘rules’ I’ve heard – I don’t want to encourage anyone to use them!) 

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Topics: Business Value, business advice, Business valuation, Business advisor, business valuer, JPAbusiness, Parramatta, Central West NSW

How to calculate your Business Maintainable Earnings [infographic]

Posted by James Price | JPAbusiness on 08-Jul-2020 02:00:00

Business Maintainable Earnings (also known as 'Future Maintainable Earnings') reflect the ability of a business to generate earnings into the future.

BME is one of the most important concepts the market will consider when assessing business value – it is particularly critical for determining a business' going-concern value, including the value of goodwill.

The following infographic shows how to take account of abnormal fluctuations in your business’ performance (i.e. normalise) when calculating your BME.

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Topics: Business Value, Valuations, BME, business advice, Business advisor, JPAbusiness, valuing a business, Parramatta, Central West NSW

How to prove goodwill value [templates]

Posted by James Price | JPAbusiness on 01-Jul-2020 02:00:00

Goodwill ­is a key component of business value, alongside factors such as working capital and plant and equipment.

Many people think of goodwill as an ‘intangible’ and therefore its value can’t be proved, but that's not necessarily the case.

Goodwill value relies on being able to prove the sustainability of a business’ earnings going forward.

In this blog we’re going to explain how record-keeping is a critical component of proving that sustainability, and provide some simple templates to get you started.

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Topics: Business Value, contracts, business advice, Business valuation, JPAbusiness, goodwill, Parramatta, Central West NSW, work in progress, WIP, tendering

How a valuation can be used to add value to a business [video]

Posted by James Price | JPAbusiness on 01-Apr-2020 02:00:00

Business owners often seek a business valuation after being prompted to do so by a 'significant event’, for example:

  • a family break-up
  • retirement
  • need for business restructuring
  • bank lending requirement
  • purchase offer
  • bringing in a new shareholder or partner, and so on.

In this video I explain how valuation can actually be used as an ongoing management tool, adding value while you’re running the business and also potentially boosting value on exit.

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Topics: Business Value, Valuations, Exiting your business, Video, Business advisor, business management, growth strategies, James Price, JPAbusiness, Parramatta

 
Disclaimer: The information contained in this blog is general in nature and should not be taken as personal, professional advice. Readers should make their own inquiries and obtain independent, professional advice before making any decisions, taking any action or relying on any information in this blog. 
 
 

 

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