says Cress Diglio of Corporate Investments International, Inc. and IBBA chairman. "Consider adding value through important intangibles like employees, customer lists or location."
There are a number of options to consider:
- Develop key employees. Buyers generally aren't interested in paying a premium if the business relies on you for its success. Demonstrating that your company's success is reliant on your capable, well-trained employees - not just you - will pay off at the time of sale.
- Document what you do. Be sure that job descriptions, operational processes, strategic plans and business records are documented and
well-organized. Documented records give a buyer greater comfort that he or she will be able to emulate your successful growth and will help your buyer obtain financing.
- Build relationships. Name recognition, customer awareness and your reputation are all part of your business value.
- Improve cash flows. A potential buyer wants to see the "true cash flow." Diglio says ... "It's important for business owners to make sure they are driving all income to the bottom line."
- Review your assets. Sell off or dispose of unproductive assets or unsalable inventory. Remove or buy off any assets that are primarily for personal use.
- Find and build your niche. Buyers will pay a premium for a niche that has barriers to competitive entry.
These intangible assets convey a value that financial statements alone don't. "Start working on intangibles well in advance of putting the
business on the market," Diglio says. "It's also important to line up key specialists - an attorney, an accountant, and a business intermediary - who will help you make the most of the sale."
