Improving the value of your business before you sell it

If you are looking to sell your business in the future you might be wondering how much your business is currently worth and what actions you can take between now and the sale time to maximise the value of your business. It can be useful in this situation to get a management consultant in to calculate an indicative valuation of your company and help identify opportunities to improve the value of your business. 

Valuing the company

There are a range of ways that companies can be valued including;

  • valuing physical assets such as stock and adding a value for goodwill reflecting your relationships with suppliers and customers,
  • valuing the annual cash flows and applying a discount towards the future cash flows, and
  • market implied pricing where the value of your company is directly compared to recent sales of similar companies in the same sector. 

Management consultants are skilled at identifying the best method to value your company and explaining to you the factors which can increase or decrease the value of the company. Different sectors tend to value one method over another, depending on whether your profits are driven more by sales of goods and services or innovation and technology advances. 

Identifying opportunities

Once the value of the company has been determined the consultant can then make some suggestions on how you can improve any issues which are pulling down the value of the company. This could increase reducing the working capital of your company by reducing the inventory that is being held, improving cash flow through promotions or other techniques such as increasing the capacity of your business through operating efficiencies. 

Improving value of your company

Once you are aware of the opportunities for improvement you can place some improvement initiatives in place, which fit appropriately with the timeline until you plan to sell the company. Often case studies from other companies (including the operating experience of the consultants) can help people to identify improvement opportunities which have worked effectively in similar companies, which can ensure that your efforts to improve the company are as efficient as possible. 

Management consultants (like those at Ferrier Hodgson) can also compare common measures and indicators in your industry which will help you set goals when you put these improvement opportunities into place. 

If you are looking to sell your company in the future it can be useful to get management consultants in to value the company. They can help to identify opportunities to improve the value of your company and help you implement improvement initiatives to help you get the best possible price for the company.