Around the Web: A Week in Summary
An article published recently in Divestopedia entitled “Master Ten Value Drivers to Sell Your Business at the Highest Price” explains 10 value drivers that sellers can exploit to get the highest sale price for their business. The author explains that a business value is not necessarily driven by what the business is worth to the current owner, but what its transferrable value is, or what it is worth to a prospective buyer. The following are outlined as some of the most important value drivers for sale price of a business:
- Stable and Predictable Cash Flow
- Reliable Financial Information
- Customer Diversity
- Human Capital/Quality of Workforce
- Growth Potential
- Operating Systems and Procedures
- Facility and Equipment Condition
- Barriers to Competitive Entry
- Product Diversity
These value drivers not only lower risk for a potential buyer, but knowing them also helps the seller put together a much better and more complete package for any potential buyer. Knowing your business during the sale process is crucial for a seller if they want to get the best possible price.
A recent article in The Business Journals entitled “How to Pick a Solid Advisory Team to Help with a Sale” outlines the process of picking a team to help a seller during the sale of their business. Some important takeaways include knowing what skills you need on your team, the utilization of both internal and external resources, a team that is both broad in skillset but also lean to avoid strategy inconsistencies, and advisors with applicable knowledge and skills in the transaction process.
While it may seem intuitive to continue to focus on productivity and growth as an executive during the transaction process, it is crucial to build a team early on that will be able to help add the skills and perspective necessary in the sale process.
The recent article in Divestopedia “What Role Does Your Brand Play in a Successful M&A?” explains how a business’ brand often takes a backseat to most other business activities during the M&A process. The author explains how crucial the brand really is within the transaction process, as it represents how the new business is both perceived and received by the public and shareholders of the acquiring entity, as well as employees and customers.
Branding in consideration of employees is very important in the transaction process, as the cultures of the now combined companies may differ drastically. This makes consideration in terms of culture and structure so important for both entities to ensure the process runs smoothly and the new entity is able to move forward seamlessly.
In consideration of the customers of both entities, the transaction process should flow and occur in a way that will least affect customers. This includes seamless integration of customer service processes as well as pricing and product availability, among others.
Other stakeholders to be considered during the M&A process include investors, partners, and others that are directly affected by the sale. A brand strategy that takes into account these members’ best interests will lead to a better rate of success.