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MAXIMISING VALUE Partners they start to evaluate your business and
The main drivers of the value of a business recommend it will be good for them to see lots of
are trading history, company size, IP, asset planning a sale to positive news. However, be mindful of
base, management team, quality of your complete shortly the consequences of any strong political
sales and customer base, sector, niche, after a financial year opinions you might express
end so it’s based
and market leadership. Buyers typically on an audited set
calculate their valuation by applying a of accounts and • Market leadership: If it’s a crowded
multiple to pre-tax earnings. They will be shows the profits market, find something that you can be
more convinced by a three-year profit that determined the the best at. If you aren’t the biggest, could
history than a three-year forecast. purchase price. They you be the fastest growing or the most
also advise that if innovative? Do you have the highest levels
you have different
Demonstrating a solid pipeline of sales, parts of the business of customer loyalty? Having some aspect
tying customers into long-term contracts, with different of market leadership will make you more
and consistently hitting monthly targets models and P&Ls, attractive to buyers
will help as you’re courting buyers. it may be best to
Proprietary technology and intellectual de-merge them into • Barriers to entry: Make it more difficult
property can add huge value to your two businesses and for your buyer to enter your market
business. It may differentiate you from sell separately. without acquiring you. Tie clients into
your competitors and could justify a long-term contracts. Invest in technology
premium price for your business. or machinery early enough to demonstrate
the long-term benefit of that investment.
By planning early, you can address any Test international markets to sell the
major changes before going to market bigger opportunity for further expansion
in order to maximise the valuation. Here
are five areas highlighted by Jane Gomez • Customer base: Your business may be
who leads The Supper Club’s Maximising deemed a risky prospect if you are heavily
Capital Value workshops: reliant on one big client, or one type
of customer with one revenue stream.
• Identify possible buyers: At the point Your business will be more appealing if
you think you might sell, think about who you can show that you have increased
might buy you. Consider all options (ie spend from customers and made them
not just the obvious trade buyers), try to more profitable. Your business will look
understand what they will value most, and more robust if you have diversified your
position yourself to be that business customer base. If they are in other sectors
this will show potential for further growth.
• Build your profile: Leading up to a sale, In addition to long-term client contracts,
build your profile by entering industry buyers will also be drawn to recurring
and / or national awards, try to become income streams (ie subscription models)
a thought leader in the trade press, and
speak at industry conferences. Buyers A common piece of advice from members
and their advisers will Google you when is to get advisers on-board early to help

MEMBER INSIGHT: which were challenging at the time. Ultimately
THE IMPORTANCE OF THE the right team emerged from that period and
the transformation got underway.
RIGHT SENIOR TEAM
Alastair Stewart, CEO, etc.venues A new Finance Director arrived after three
months. This unlocked the huge potential the
business had. The best decisions are always
The strategy was to acquire the business around the people who take up the senior
and secure a good equity package for the management positions. The business has grown
existing management team and the buy-in its revenues five-fold since the 2006 buy-in. A
team. successful secondary buy out was carried out in
2012 and the business is well placed to look at
The transaction was a ‘buy in buy out’, its next investment decision.
sometimes called a BI-MBO. Arriving into an
established management team who have DEALING WITH PE
done a good job growing their business and I opted to take money from private equity and
needing to execute a more ambitious high it has worked very well. Private equity has its
growth plan led to clashes and departures; own language; the culture and style between