How to Add Value to Your Business Before Exiting

Generally, an exit strategy is implemented years before the planned exit date. This gives you time to work on your sale plan, deal with any succession issues, and, crucially, add additional value to the business before a sale.

Understanding Your Business’s Sale Value

Every business has its unique sale value based on size, asset worth, and perceived market value. But how can you add value and achieve a better sale price?

Make Sure You’re Running a Tight Ship

When you sell a house, real estate agents advise redecorating and clearing out clutter to boost the sale price. The same applies to selling a business. A potential buyer generally wants a business in good shape. While some may buy a poorly performing business to turn it around or sell off assets, a well-organised and efficient business is often a better prospect.

Steps to add value include:

• Implement modern, digital systems for efficient, secure, and integrated operations.
• Maintain excellent record-keeping, compliance, and governance procedures.
• Build a strong customer base for stable sales and good revenues.
• Develop good brand awareness and a positive reputation in your sector.
• Ensure efficient executive, management, operational, and administrative teams.

Resolve Ongoing Business Issues

Every business faces ongoing issues like legal worries, court cases, or bad debts, which can negatively impact its value. Resolving these issues can present a worry-free environment for the new owner, adding value to the business. Work with your lawyers, HR advisers, and accountants to resolve long-standing problems. Transparency about previous issues builds trust and creates a better relationship with the buyer.

Improve Your Financial Health

Buyers look for financially healthy businesses that promise a healthy profit. They want to see balanced books and potential for continued profitability. Control your financial management and have a strategy to improve each area of your business as you near your sale date.

Key financial areas to focus on:

• Strengthen your balance sheet to present attractive accounts.
• Improve your profit and loss by increasing revenues and cutting expenses.
• Boost your cash flow through careful management.
• Reduce debt liabilities by resolving late payments and bad debts.
• Enhance your credit score by partnering with a credit improvement specialist.
• Ensure good funding by working closely with lenders.

Prepare Your Executive Team to Take Over

A business reliant on its founder is unattractive to buyers. If your business depends on your operational input, it can’t function effectively without you. Identify key areas where you have input and systemise them under your executive team. Delegate responsibilities like payroll to your finance director or client sales presentations to your sales director. This ensures a smooth transition and continued operation without leadership issues for the new owner.

Work with Advisors to Add Value

Business advisers in the M&A market have extensive experience across various sectors. They know what attracts buyers and the main red flags. Their advisory services can enhance every element of your business, making it more attractive to potential buyers and facilitating a quicker sale.

Talk to Us About Adding Value to Your Business

Make your company an attractive proposition on the market to meet your personal and financial goals for your business sale. Adding value isn’t instantaneous, but you can move towards a more valuable sale price with the right advice and planning.

If you’re planning your exit, talk to us. We’ll help you plan your exit strategy and add value at each stage to boost your return from the sale.