Last Thursday saw the first in our Autumn series of Masterclasses for business owners. Unsurprisingly, business valuations were top of the list of questions. I’ve met over 10,000 business owners in the past 12 years and there’s almost always a gap between an owner’s price expectation and what a buyer expects to pay. To bridge that gap it’s essential to understand the difference between price and value. It’s crucial that the seller understands what “hidden” assets they have and how future potential can be used to leverage sale price.

In the informal and confidential environment of a Masterclass, we explained what acquirers look for and the how, armed with the right information, owners can “fine tune” their companies in preparation for sale.

Selling a business is too often a “Manyana” step for business owners; you know you want to do it but maybe next month, next year…! So when the decision to sell is finally made it’s a shock for some owners to learn that the price they thought they would achieve is only realisable by adding strategic value before marketing the business.  I can’t count the number of owners I’ve advised that have told me that they had a secure contract with a major plc and were surprised when they discovered that a buyer would see that as a major risk and at best reduce the offer price. The same goes for reliance on suppliers and staff. Better still, companies that have created a unique product or brand but haven’t protected it – leaving money on the negotiating table.

It’s absolutely essential to understand the way acquirers (both trade and private equity) work. They are very clear on what they are looking for from an acquisition and are hardened negotiators. They are disciplined when evaluating an acquisition and know how to integrate a new business in order to generate real value and financial return. The pride and emotion felt by business owners hold no sway around the negotiating table. This is purely about achieving a return on investment. So to receive the better price, owners have to promote the future value of their business to the prospective new owner. 

If you own a business and want to find out how to make it more attractive to acquirers and achieve a premium exit price, come along to an Evolution Masterclass. It could be the most valuable 3 hours you’ll ever spend.


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