{"id":561176,"date":"2012-06-27T04:07:23","date_gmt":"2012-06-27T08:07:23","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbgreenbay\/the-key-ingredient-selling-your-company\/"},"modified":"2022-01-31T12:44:38","modified_gmt":"2022-01-31T17:44:38","slug":"the-key-ingredient-selling-your-company","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/the-key-ingredient-selling-your-company\/","title":{"rendered":"The Key Ingredient to Selling Your Company"},"content":{"rendered":"
\n

Business Appraisers, before beginning an assignment, like to know the purpose of the appraisal. Usually the assignment demands \u201cbullet proof\u201d documentation: comparables, EBITDA multiples, projections, discount rates, etc.\u00a0 Unfortunately, in situations where the purpose of the valuation is to establish a selling price, the business appraiser really doesn\u2019t understand the business elements \u2013 or, since these business elements don\u2019t figure into the numbers, they are largely ignored. However, they do have value; in some cases, significant value to a buyer.<\/p>\n

Valuing these business elements requires that computers, adding machines and calculators be put aside. The business should be looked at from three key business elements: the Market, the Operations, and Post-Acquisition. These elements are certainly subjective, but also critically important to a prospective buyer.\u00a0 A buyer\u2019s opinion of the business elements can drive the actual offering price significantly higher\u2014or lower. In fact, the business elements such as Fundamentals and Value Drivers can impact price as much as the Financials.<\/p>\n

Here are some important questions to consider:<\/p>\n

Market:\u00a0\u00a0\u00a0 <\/strong><\/b>
\nAre there significant competitive threats?
\nIs there a large market potential?
\nDoes the company have a reasonable market position?
\nAre there broad-based distribution channels?
\nIs there a wide customer base?
\nWhat’s the company’s competitive advantage?<\/p>\n

Operations:<\/strong><\/b>
\nAre there significant alternative technologies?
\nIs sound management to remain?
\nIs there product\/service diversity?
\nAre there multiple suppliers?<\/p>\n

Many business owners feel that what prospective acquirers are looking for are quality and depth of management, market share, profitability, etc. Brian Tracy, in his book, The 100 Absolutely Unbreakable Laws of Business Success<\/em>, states that the key ingredient is \u201ca company-wide focus on marketing, sales and revenue generation. The most important energies of the most talented people in the company must be centered on the customer. The failures to focus single-mindedly on sales are the number one causes of business failures, which are triggered by a drop-off in sales.\u201d<\/p>\n

Tracy goes on to point out that company owners and\/or presidents should observe industry trends, pay attention to what the competition is doing that works, and learn from them.\u00a0 Find out what is successful and what isn\u2019t in your industry \u2013 trends are vital. It is important to understand that established and mature companies are generally just trying to protect their market share, while start-up companies are really attempting to gain or establish market share.<\/p>\n

Tracy estimates that 80 percent of new businesses close down within the first two years, and 100 either fall off or join the top 500 companies in the U.S. because they are acquired, merged or broken-up, and even a few actually fold \u2013 Enron being a good example.<\/p>\n

Tracy also mentions that problem solving, decision making and team (not individual) collaboration are key factors.\u00a0 However, as he points out, the best companies have the best people.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Business Appraisers, before beginning an assignment, like to know the purpose of the appraisal. Usually the assignment demands \u201cbullet proof\u201d documentation: comparables, EBITDA multiples, projections, discount rates, etc.\u00a0 Unfortunately, in situations where the purpose of the valuation is to establish a selling price, the business appraiser really doesn\u2019t understand the business elements \u2013 or, since […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-561176","post","type-post","status-publish","format-standard","hentry","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/561176","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=561176"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/561176\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=561176"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=561176"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=561176"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}