Top Tips on Maximising Value for a Sale
On 10 November 2016 Kingston Smith Corporate Finance’s media specialist team held the first of our series of workshops aimed at the owners and managers of marketing and media technology agencies who may be planning to sell their businesses at some point in the future. Nicola Horton, Principal, summarises the top considerations arising from the discussion:
- Concentrate on what buyers are looking for. Yes, they may be interested in you for a host of different reasons, but fundamentally valuation will be driven by the profitability of your business, so understand the KPIs that are relevant for your sector and benchmark yourselves against your peers. Focus on profit improvement in the run up to sale.
- Get your house in order. Prospective buyers will take comfort from businesses that produce regular, accurate management information; that can lay their hands on signed client contracts; and have proper business development tracking tools in place.
- Plan your succession. If your aim is to sell and leave the business within a reasonable period of time, ensure that you already have the team in place to take over from you, so that this isn’t a problem for the buyer to fix. Buyers like to see management with “skin in the game” but don’t spray equity around – focus on rewarding the key people who will drive the business forward.
- Focus on strategic client account management. Lock in relationships at multiple levels throughout your organisation and monitor and manage the individual client plan.
- Map your talent – do you have the right people with the right skills in place to deliver against potential earnout targets?
- Incentivise your employees. Not everyone has to receive equity; consider other potential benefits to enhance your position as employer of choice.
- If you have the luxury of time, run your business as though it was for sale for at least 1 to 2 years before it goes to market. Remove any “lifestyle” type arrangements, professionalise and concentrate on making incremental improvements across the business.
- Employ seasoned professional advisers – people who have been there and done it before, can advise you of the traps and pitfalls, and can do a lot of the heavy lifting for you, so you can focus on delivering on the forecast numbers in the run up to completion of a sale.
The speakers at our workshop have filmed some more of their top tips for business owners – To view them, please click here.