Selling a business is often one of the most difficult things an owner will ever have to do. Most are not ready, or worse, they are forced into it. The mission of the The Business Owner Transition Academy is to prepare business owners for transition by increasing the probability and value of their exit in alignment with their personal definition of success.
* Study Shows Why Many Business Owners Can’t Sell When They Want To, forbes.com, February 5, 2017
Company value must be looked at through the lens of the buyer as opposed to that of the seller. This is true in all types of transactions, not just third-party sales. Most succinctly, it comes down to two things:
- First, is net profit or net cash flow. Most commonly, this number is represented by Earnings Before Interest Taxes Depreciation and Amortization, known as EBITDA. EBITDA is further adjusted by factors unique to the business to arrive at Adjusted EBITDA.
- Second, is the uncertainty of those cash flows/Adjusted EBITDA in the future. This uncertainty is manifested in the multiple of cash flow the buyer is willing to pay for the company.
Our team coordinates with other advisors including the M&A team and the legal and accounting teams to make recommendations to increase the value/quality of the company using the I.M.G.O.O.D. Checklist™ as a foundation.
I - Increasing Cash Flow, and a written plan to continue increasing cash flow
M - Institutionalize Management
G - Documented Growth Plan
O - Optimized Financial Statements
O - Operations Documented
D - Diverse Customer Base