Value and valuation are two different things.
But they’re related.
When calculating how much your business is worth, most people simply look at revenue and profit – then plug those numbers into a spreadsheet.
That spreadsheet’s formula will likely be a multiple of earnings.
But business buyers don’t really care about your past performance. Yes it’s a helpful guide. They’re more interested in how it will perform in the future and the return they will get on their investment.
So understanding what motivates a buyer to acquire your business and the likely return they will achieve post-acquistion, will give you a much clearer perspective on what they value most in your company – and how they value it.
And knowing how individual buyers value your business (what’s important to them), well in advance of an exit, is extremely powerful indeed. It allows you to focus your energy and resources into creating actual value in your business – wherever it has the greatest impact on valuation.
We use a checklist of 25 Valuation Drivers when we are looking to maximise company valuation, which provides business owners with a toolkit to increase their end-valuation, prior to the exit itself.
What usually happens, is that focusing on just one or two of these drivers will yield outsized results. Deciding on the right drivers to pick, depends entirely on the business you have and what will really move the dial.
For a copy of my 25 Valuation Drivers checklist, drop me a message on Linkedin and I will send you the doc right away..
#exitlaunchpad #exitstrategy #business #valuation #M&A