ExitAdvisor Blog

How To Avoid This Valuation Discount

Business Discount

 

The Swiss value their independence. They don’t use the Euro even though they live between France and Germany.  They never chose sides in the World Wars and avoided aligning with one geopolitical regime over the other. 

That’s why we use the name the Switzerland Structure to describe a business model that is set up to be free of a reliance on a key customer, employee, or supplier. 

A reliance on one customer or employee can hurt the value of your business, but its easy to overlook how one …

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Someone is Going to Throw Money at Your Business? Really?

ExitAdvisor Toon & Tip

OK, everyone has heard about a few huge deals for technology companies over the years. But business owners rarely receive a premium for their business.

Buyers will look at all the important factors such as cash flow, key employees in place, profit margins and prospects for future growth, to name just a few.

Then they will try to purchase the business for the best deal possible. 

Business owners should consider having a valuation performed by a professional now and then begin preparations to…

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The Power of “NO”

The power of No

Business owners can be confronted with many yes or no decisions every day.  Some are small decisions with not much impact, but some are critical decisions that can affect the direction of the company, such as adding a new line of products or a new service. 

And many times, it can be much harder to say "no" than to just give in and say "yes" to the pressure of the moment. 

A good question to ask yourself to help make that decision might be "will saying YES risk the value of the company by was…

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Stop Selling Your Time

ExitAdvisor Stop Selling Billable Hours

 

If your goal is to build a more valuable company, stop selling your time. 

Billing by the hour or day means customers are renting your time rather than buying a result, which means that your business model lacks leverage. To grow, you need to either work harder or hire more people. Since it can take months to ramp up new employees, fast growth is just about impossible.

One of the eight factors that acquirers look for in the businesses they invest in is your company's Growth Potential. Sim…

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Marketing programs to replace normal attrition


ExitAdvisor Cartoon & Tip

Most businesses will lose a certain amount of customers over time. This attrition can be caused by anything from customers who are unhappy to customers moving away. 

The value of a business has a lot to do with the expectations of a buyer being able to maintain the current revenue levels (in addition to opportunities to grow the business). Buyers will want to see proven marketing programs in place that will fill that ongoing “leaking bucket”.

Let's talk confidentially about the value of yo…

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Protecting Against the End Run

 football player end run

A football defensive coordinator needs to protect against an “end run,” a tactical play where your opponent sends the running back wide around the offensive line to try to evade the oncoming tackle.

Just like in football, you have to defend against an end run coming from a supplier that chooses to go around you to get to your customers. The more of your supply you get from a single provider, the more vulnerable you are to that supplier deciding they don’t need you and instead deciding to go …

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The Humble Yogi Sells His Business

Built to Sell Podcast

 

This was a pretty interesting episode of John Warrillow's Built to Sell podcast.

Along with three friends, Sebastian Johnston co-founded TheAmazeApp in 2014. The idea was simple: Social media influencers could upload a picture of what they were wearing and tag the clothing on TheAmazeApp’s database of e-commerce retailers. Then, when one of their followers purchased the item, TheAmazeApp would receive a commission they shared with the influencer. 

The founding team raised $800,000 through…

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Key employees in place can be very important in the sale of a business!

Key Employees in a Business for Sale

Key employees in place can be very important in the sale of a business!

Buyers are always interested to know if there are well-trained key employees that will stay with a new owner of the business. That expertise within the company's operations can be very important in the transaction and future performance.

Key employees can include top managers, department heads and other long-time employees in important positions throughout the company.  In order to sell their business, owners must give t…

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What will your industry look like in 5 years?

Business planning

Technology and the internet are essentially changing every business in some way or other. It can be challenging, but business owners must keep aware of what ‘s going on in their industry and where it is headed.

Some businesses have a bright future, others need to make drastic changes.  Business owners can search on the internet, go to trade shows and seminars, read books, articles, blogs, talk to others in the industry.

In order to have future value for a buyer, business owners can't ignore …

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Why the Future of Your Business Is Critical to Its Value

skyward acquisition story

As a business owner, you’re likely proud of the results you’ve achieved in the past, but when it comes to the value of your business, your future is critical. That’s why your growth potential is one of eight factors that drive the value of your business.

One metric that acquirers may use to evaluate your growth potential is your revenue per employee.

Alphabet (Google’s parent company) generates around $1.3 million in revenue per employee. Compare that to the advertising agency WPP Group, who…

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