CEO Advisor Newsletter July 2013
Maximize the Value of Your Business
Funding your business or selling a business is likely to be the largest and most important financial deal any business owner will make. Unless you have sold a business before, you will have no experience to draw on and won't know what to expect from a savvy buyer.
You need to avoid the pit falls you will encounter and ensure you maximize the value of your business well before and at the point of exit. With decades of experience in mergers and acquisitions, our expertise and experience are tremendously valuable in maximizing the value of your business and completing a successful transaction.
Whether you are growing and in need of funding, or planning the sale of your business, there are 7 key factors that will greatly enhance the value of your business. Focusing on these factors will yield a huge return.
- Growth rate at or above the growth rate of your industry
- Growth plan and forecast to achieve a sales level that attracts funding or a buyer, a large market with a strong sales team, distribution in place, and effective marketing
- Healthy Gross Profit Margins (GPM) - approximately 80% GPM for SaaS software companies, 70% for on-premise software companies, 50 - 60% for service companies, 40 - 50% GPM for manufacturing companies
- Strong and growing EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization)
- Solid management to perpetuate and grow the business now and post-sale
- Recurring revenue model and a "need to have" product or service
- High renewal rates for the recurring revenue aspect of your business model
Term Sheet or LOIThere are many variables that can be presented in a Term Sheet for funding or Letter of Intent (LOI) from a buyer. Your goal is to attract a funding Term Sheet or LOI (an offer to buy your business) from a strong funding source or buyer that represents a good fit for your goals. A non-binding Term Sheet or LOI typically will come early on in the process, after a couple of meetings and a review of your financials.
Since the Term Sheet or LOI is non-binding and typically the optimal scenario (the funding source or buyer may reduce the offer after due diligence), it is critical to have a 3rd party negotiator/business advisor to help you maintain a good relationship with your funding source or buyer. A seasoned business advisor can add tremendous value in negotiating the best offer and in getting the deal to completion.
Preparing for Funding or the SaleIt is extremely important to start planning for funding or a sale well in advance. This gives you time to solidify the business - fixing any issues that could dramatically affect its value and making it as attractive as possible to potential funding sources and buyers.
You also want to make sure your financials are in order and are ready for the due diligence process. More importantly, you want to operate your business to address the 7 key factors above, such as ensure you have recurring revenue with one, two or three year contracts to provide real value as a seller.
Most of all, you need to continue to manage your business effectively and avoid any dips in sales or profits before or during the funding or sale process. Working with a business advisor to primarily focus on the preparation, funding or sale will enable you to stay focused on managing the business effectively.
Choosing Advisors When Seeking Funding or Selling Your BusinessExperienced advisors such as a corporate transaction attorney, tax advisor and business advisor are essential for maximizing the value of your business for fund raising or an effective sale. The right business advisor can have a big impact on the preparedness and success of your fund raising or sale, and the amount you receive. It is extremely important to have an experienced, third-party negotiator to help you through the process and negotiate a deal to your satisfaction.
CEO Advisor, Inc. has the expertise and decades of experience in maximizing business value, fund raising and buying and selling companies. Contact us today for a no cost initial consultation at (949) 629-2520 or email Mark Hartsell, MBA, CEO of CEO Advisor, Inc. at MHartsell@CEOAdvisor.com.
CEO Advisor Franchising, Inc. Adds CEO Advisor of Inland Empire in California
- CEO Advisor Franchising, Inc., (www.CEOAdvisorFranchising.com) a franchisor of business advisory firms serving the needs of CEOs, presidents and business owners of small and mid-size companies, is excited to announce that Geoff Thompson, MBA, has joined as CEO Advisor of Inland Empire.
- Geoff Thompson is an entrepreneur and seasoned business advisor with broad-based business experience and expertise in strategy, growth, sales, manufacturing, operations, finance and accounting. Geoff was previously the CEO/President of Thompson Consulting Inc., a business advisory firm that advised small and mid-size business owners. Geoff was also the President of EGR Inc. for over fifteen years. Geoff Thompson achieved his Bachelor's Degree in Business and a Master's Degree in Business (MBA) from Columbia Southern University.
- CEO Advisor of Inland Empire provides affordable, hands-on advisory services on growth, strategy, business planning and forecasting, funding, sales strategy, sales team building, marketing planning, turnarounds and mergers and acquisitions by working directly with CEOs, presidents and business owners of small and mid-size companies as a trusted business advisor. Since 2004, CEO Advisor has increased the growth, sales, profits and value of many businesses nationwide with consistent success.
- Mark Hartsell, CEO of CEO Advisor states, "We are very fortunate to have Geoff Thompson join us as CEO Advisor of Inland Empire providing comprehensive, hands-on business advisory services. Geoff is a proven, seasoned business consultant who provides a full range of advisory services consisting of on-site meetings, conference calls and hands-on work to accomplish specific goals of CEOs by generating tangible results. We are very hands-on, working hard on a weekly basis to grow our clients to the next level."
- About CEO Advisor Franchising, Inc.
- Based in Newport Beach, CA, CEO Advisor Franchising, Inc. provides a proven business advisory system, offered in 40 states across the U.S., enabling a business consulting firm to affordably, effectively and locally service the specific needs of CEOs, presidents and business owners of small to mid-size companies from a wide range of industries, including technology, business and professional services, light manufacturing and many other industries.
- Contact CEO Advisor Franchising, Inc. today for business opportunities as a CEO Advisor in your local area at (949) 629-2520, by email at info@CEOAdvisor.com or visit us at www.CEOAdvisorFranchising.com for more information.
- Contact Geoff Thompson, MBA, CEO Advisor of Inland Empire by telephone at (909) 270-2789, by mobile phone at (909) 234-5991 or by email at GThompson@CEOAdvisor.com to grow your business to the next level.