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Take steps to make your company ready for sale, even if it's not today.
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Money Matters:
Preparing Your Company for Sale
J. Craig DickensPrincipal
OneAccord Partners.www.oneaccordpartners.com
Frank Coker, MBA, CMCCEOCoreConnex, [email protected]
AgendaPreparing Your Company for Sale• The big picture• When do you start?• What’s important?• Who are the players?• Dashboarding• 5 keys to M&A success• InfoComm resources
The Market
• Baby Boomers will sell 9.5 million businesses nationwide in the next 10 years.
• $10 trillion in wealth will transfer during that time.
• Only 2/10 lower middle market companies will have a “successful M&A event”.
• 30% will go to liquidation due to lack of succession planning
Do you have a plan?
• Hope is not a plan - commit to working ON your business (vs. FOR or IN your business).
• Most business owners fail to create value beyond the cost of capital (lifestyle).
• 75% of businesses start preparation at the “last minute”
Are you Sellable?
1. Financial Performance
2. Growth Potential
3. The Switzerland Structure
4. The Valuation Teeter Totter
5. The Hierarchy of Recurring
6. Revenue
7. The Monopoly Control
8. Customer Satisfaction
9. Hub & Spoke
Financial Performance
Your Score?
Buyers care about 2 things:
a. How much profit will your company generate in the future.
b. How reliable are those estimates.
Predictable and consistent margins and earnings
increases your companies value
Predictability
Which would you pay more for?
Growth Potential
Your Score?
What is your industry, segment, and company’s
growth prospects?
How do you compare?
What is your mindset towards growth?
Increasing growth rate and scalability makes your
company more valuable.
Switzerland Score
(Customer Diversity)
Your Score?
Do you have a diverse customer base and multiple streams of revenue?
Product SalesIntegrationServicesConsultingRental & StagingTime and Materials workOther
The more boxes you can check the more valuable you will be?
The Valuation Teeter Totter
Your Score?
What are your gross margins and how do you get paid? (Cash flow, payment cycles and
inventory demands)
Increasing margin and mix of business as well as
decreasing cash needs increases value.
Hierarchy of Recurring Revenue
Your Score?
The Hierarchy
6. Consumables: toothpaste
5. Sunk $ consumables: toner.
4. Subscription: magazine.
3. Sunk $ subscriptions: Bloomberg
2. Auto renewal subscription: Iron Mountain
1. Long term contracts: iPhone
Move toward more reliable and recurring revenue streams to
become more valuable.
Monopoly Control
Your Score?
What is the exclusivity of your business with your customers?
Any Barriers to entry?
Only game in town, differentiated offering, secret sauce or IP makes you more
valuable.
Customer SatisfactionNet Promoter Score
Your Score?
“Based on your most recent experience, how likely is it
that you would recommend My AV Company to a friend
or colleague?”
Satisfied “promoter” customers make your company more valuable (“like”, tweet etc.)
Hub & Spoke
Your Score?
The “If you got hit by a bus” test?
Businesses that are not reliant on their owners are inherently
more valuable.
Want to be more valuable?Make what you do:
• Teachable• Valuable• Repeatable
Preparation Punch List
• Your team (advisor, attorney, broker)• Your plan for succession & transition• Your business plan• Financial statements • Growth charts and forecasts• Employee agreements• Cap table (ownership %’s) - governance• Standards, processes, procedures, price lists• Key customers & suppliers, contracts, volumes• Revenue breakdown – recurring / one-time• Sales pipeline• Marketing program and statistics• Incentive payment history
What are Your Trends
• Growth• Margins• Working Capital• LOB Performance• ROI• Asset Performance• Staff Contribution
Corelytics Dashboard
•Trends•Goals•Comparison •Forecasts•Metrics•Contribution
Dive Deep – Dive Quickly
• Focus on gaps between plan and actual• Get the team to solve and close gaps
Monitor Problem Areas
Review With Team Monthly
Get an Advisor (Coach)
Recommended role:• Facilitate monthly review process
• Build structure and process
• Keep focus on priority issues and opportunities
• Help solve specific problems
• Support accountability
AV Industry Trendsat http://www.corelytics.com/InfoComm
InfoComm Exclusive Benefits:
No-charge dashboard consultation• Email: [email protected]• Subject: Free Advisor
No-charge M&A consultation• Email: [email protected]• Subject: M&A Planning
For More Informationhttps://infocomm.corelytics.com
