10 tips to increase the value of your business
When you decide to sell your company or to open its capital, the question of its valuation often becomes an expert debate (which valuation methods) or a matter of personal conviction (what is the “right price”). What if you became an actor of this valuation by the very management of your company? Take the right decisions upstream, instead of being subjected to the debate on the price afterwards… This requires anticipation and method. Actoria has listed the 10 strategic keys to ” boost ” the value of your company.
1. Knowing how to surround yourself
Multidisciplinary and experienced, France’s SME transfer specialist will accompany you and carry out many of the tasks involved in the transfer project so that you can devote all your efforts to the growth of your company. He helps you and your company to present yourself to buyers by drawing up your personal project and a memorandum. He distributes your offer and filters the candidates so that you only meet the most relevant ones. He negotiates and mediates during the negotiations in order to make the transfer of the company a success.
2. Continue to undertake
More than ever during the preparation of the transfer, you have to develop the company to obtain new contracts. You must demonstrate that your company is in a promising market and that your teams are in a commercial dynamic. Your ability to stay in charge proves your reliability and establishes a relationship of trust: you are not leaving a poisoned gift but a competitive and profitable company.
3. To be seen, known and recognized
Capture the attention of interested buyers by having a good visibility via a modern and functional website to present your business. The notoriety guarantees a loyal clientele and a solid network, a solid anchoring through a professional organization thus allows to increase the value of your company. Your website must contain testimonials from your customers and demonstrate the know-how of your teams.
4. Innovate and invest
The buyer wishes to recover a company that has been far-sighted in preparing for the future and differentiating itself from its competitors. Investments in intangible capital (software, patents or brands) reinforce the barriers to entry vis-à-vis your potential competitors. However, it is important to measure the investments so that they do not weigh on the freedom of the buyer.
5. Reduce costs
Profitability is a determining factor in setting the price of the transfer. During the preparation period you should adjust your compensation and benefits to bring them closer to the norm in your industry. You will also have to optimize other cost items: fixed charges, expenses related to the activity or to employees, marketing expenses, the supply chain, your status from employee to TNS, or even avoid exchange losses.
6. Diversifying the offer
Diversification is above all a guarantee of security: you do not depend on a single market or a single product. You can compensate for the hazards of your different activities or correct its seasonality. It is also an opportunity to expand your market. Selling a product to a customer becomes an open door to sell your whole offer to the one who already recognizes you for your reliability. Finally, it is a seductive asset since it increases the chances of synergies and presents a branch of activity that lacks investment and therefore creates value.
7. A diversified clientele
This reduces the commercial risk of seeing a part of the turnover evaporate during the takeover. A reasonable threshold would be that the first customer should not represent more than 20% and the first five not more than 50% of the turnover. This demonstrates your ability to sign new contracts and adapt to different customers. If you are too dependent on one customer, this will reduce the company’s bank rating and thus weaken the financing of the takeover. An “economic dependence” is even forbidden by article L.430 of the Commercial Code. Long contracts spread over several years with loyal customers, demonstrating recognized know-how and commercial ties, will be highly appreciated.
8. Depersonalize” the company
The aim is to reduce the company’s dependence on you. The loss of know-how or clients must be minimal. The objective is to move from “I” to “we” and then to “you” in the management of your teams. Establishing relays of competence and decision-making will become a pillar on which the buyer can rely and thus continue his development after your departure. Finally, you need to reformulate intuitu personae contracts to bind the clients to the target company and not to the person of the company manager.
9. Valuing your Staff
At the time of the transfer, the buyer takes over the management of the target’s employees. He will appreciate a loyal and trained team to continue the company’s growth. The presence of family members or close friends would be a point of concern. Staff turnover will be even lower if the well-being of the individuals, the recognition of their talents and attractive salary conditions have been established before the sale. Other elements serve to enhance value, such as performance-based compensation and fixed-term contracts, so that the payroll is flexible according to the economic situation.
10. Optimized financial management
It is a question of reassuring the buyer on the financial management of the company. Optimize your working capital by having reduced customer payment terms thanks to a better follow-up and collection system, controlled supplier disbursements, and a rationalized inventory level. Optimize your cash flow at the close of the annual balance sheet when the sale approaches. Do not pay dividends in the last year, try to get paid in instalments which virtually inflates the cash on hand and finally do not launch into heavy investments.
André Didelot
Martin Costantini
Actoria International
Directeur Associé
Phone : +33 (0)4 93 13 33 47
Portable : +33 (0)6 60 50 27 21
e-mail : andre.didelot@actoria.fr
Site : www.actoria.fr
37 boulevard Dubouchage 06000 Nice
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