Strategic Planning for Business Valuations

April 28, 2018by Nate Nead0

Regardless of whether you are a solo business owner or if you are in business with another partner, it’s important to consider the organization’s overall value proposition and mission to customers and how it serves stakeholders as well as the business valuation as a whole. These are both crucial areas to consider in the event you need to or for when you are ready to sell the business.

However, before going to market, executing the proper business valuation measures and strategic planning are not only key to a smooth M&A process but also to ensure that you receive maximum value for your business.

Read on to learn more about how to properly set up your business for sale with the proper measures and steps.

Plan in Advance – If it’s time to put your business up for sale, then the first step should be to properly plan in order to ensure a smooth transition. It’s never a good idea to rush out of your business as this often results in selling your business for less than valuation.
Manage Expectations – Just like any project in your business, it’s important to set and manage realistic expectations with your partner (if you have one), your customers, your team and even your stakeholders. Additionally, it’s also important to have realistic expectations about what your business valuation and the amount you can expect to sell for.
Prove Your Productivity – Potential buyers and investors want to see a functioning and efficient business in operation to ensure that they see the true valuation behind it. Through the M&A process and transaction, ensure that your business is still operating at full capacity.
Be Prepared – Organization is key. Be sure to have all of your records, including files and financials in order for due diligence. This will ensure that you align with strategic partners, buyers, and investors that are truly the best fit for your organization.

Unfortunately, too many business owners enter deals too quickly or wait until mid-market before beginning the M&A process. In these situations, it is almost impossible to attain a proper business valuation, which has resulted in losses time and time again. Business owners can easily avoid these common mistakes by taking the time to properly evaluate the business and plan a solid exit strategy.

If you are looking for advice or guidance in evaluating business valuation or planning an exit strategy as well as a communications plan for your company for when it’s time to announce a merger, then consider working with a professional or expert.

Just as it is good practice to measure all goals, this is just as important throughout the M&A process. One goal should be to properly evaluate the business before entering into any deals or signing any agreements. This will ensure that you enter a good deal when the time is right.

Nate Nead

Nate Nead is a licensed investment banker with Four Points Capital Partners, LLC and Principal at Nead, LLC. Nate works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. Four Points Capital Partners, LLC is a member of FINRA and SIPC and registered with the SEC. Nate resides in Seattle, Washington.

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