As a business owner or manager, there are a number of 'levers' you need to control to successfully manage working capital and drive a successful, cash-generating business.
After the process of finding a buyer and selling your business, there is a good chance you’ll still need to turn up to work for a period of time.
Conditions of a sales agreement often include requirements for continuation of service for a transitional period. This involves working alongside the new owner for a set period to share information and knowledge of the business.
Seeking to exit a business just a few weeks or months after making the decision to do so, is not the best way to optimise value in a business sale.
As I explain in this video, it’s much wiser to incorporate exit and succession plans into your ongoing business planning and prepare for a sale over a period of several years.
The JPAbusiness Strategic Value Checklist has been created to help you drive positive strategic value in your business.
Don't wait until it's time to sell or exit to work on the business characteristics listed in the checklist. While strategic value drivers are not always quantifiable (as we discussed in our free eBook Strategic Value in a Business Sale) they’re not fairy dust either. They can’t be created with a magic wand overnight!
Strategic value drivers result from real actions you can take to enhance year-by-year earnings in your business, and also potentially assist you to capture extra value on exit of your business.
Goodwill is an intangible value associated with a business and is based on the business' potential to provide a future flow of earnings beyond the current owner.
Stock, plant and equipment, and other fixed assets, are tangible items that can be relatively easily valued on a market. Goodwill is intangible; essentially it is the risk premium around how and what business maintainable earnings (BME) will be delivered into the future if the business is acquired by someone else and run in basically the same way.
At JPAbusiness we believe five years is a good benchmark to be planning for succession and exit.
In this video I use the example of a JPAbusiness client to show how this forward planning can place your business in the best position for a successful exit, whether that exit comes in the form of a planned sale process or an unexpected purchase offer.
Ideally, a business will be set up for sale from the moment it begins operating.
After all, you never know when someone may approach you about buying your business, or when unforeseen circumstances may force you to sell.
A previous JPAbusiness client is a good example of why it pays to be prepared.
Business owners often seek a business valuation after being prompted to do so by a 'significant event’, for example:
- a family break-up
- 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.
You’ll often hear the internet gurus say ‘content is king’ and that in order to be successful in the online sphere you have to share lots of relevant content.
For some traditional business sellers, online marketing feels like the equivalent of walking around naked in public – you’ve got to show everything!
This presents a real conundrum for business sellers because, as many of our clients know, being in business can involve dealing with commercially sensitive information.
Getting a business sale transaction 'over the line' is not about tips and tricks.
Instead it's about efficiently managing the information flow through the detailed due diligence process to ensure all parties are well informed, the negotiating process progresses smoothly, and everyone can feel comfortable with the end result.
A good advisor or broker will successfully manage that interface for you.
In this blog, James shares some of the tools and strategies JPAbusiness employs to manage this final stage of the business sale process. These include: