May 3, 2012 @ 1:35 PM

We frequently come across a situation where a client wants assistance to dispose of their company. After briefly reviewing the business’ performance and planned outlook it then becomes clear that in the current state of the business the potential proceeds are likely to fall significantly short of the client’s hopes. Our advice in this case is that it would be a pity to sell in the short term as much could be done to improve the value of the business prior to disposal

The key is to treat the business as a strategic asset and to pay attention to the drivers that influence the value of the asset.  The value drivers of this asset include:

  • Clarity of vision of the company’s position in the market in terms of products, services, customers and location
  • Quality business processes, disciplines and deliverables
  • Ongoing business development activities [lead/proposal/closing generation and monitoring] linked to the business’ operating plan
  • Monthly financial and operational reporting and monitoring
  • Clear and unambiguous contractual agreements with customers and suppliers
  • Breadth of customer base and nature of customer agreements [eg repeat business]
  • Efficient utilisation of resources [especially staff]
  • Managed ratio of expenses and revenues
  • Controlled owners’ remuneration
  • Spread of staff skills [don’t depend on business owner]
  • Stable and maintainable profitability
  • Evidence of future growth.

Developing, implementing and monitoring a business development plan paying specific attention to each of the value drivers will significantly improve the strategic value of the business. 

It then remains to carefully seek out and negotiate with the company that would benefit the most by the acquisition of the asset on offer in terms of its own development strategy.