Uncover Your Company's Key Value Drivers

Most sellers can gain from an internal review to identify the unique attributes or "value drivers" of their company that would benefit buyers. The examination is likely to reveal points that will aid in negotiation as you, the seller, will need to be prepared to defend your asking price.

Company Strengths

What characteristics of your company increase the perceived value of product or service, thereby creating a competitive advantage? Familiar value drivers can include proprietary technologies, market position, brand recognition, satisfied customers, diverse product lines, among others.

A solid, diversified customer base

Buyers will most likely focus on your customer base in terms of revenue or profitability. They are apt to ask what percentage of total sales is concentrated in just a few customers, and what can reasonably be expected to occur in the future, based on past trends and existing relationships.

Growth factors

Although some buyers make acquisitions to gain access to particular assets, most are interested in companies that have a realistic growth strategy. Whether your growth drivers are expansion, or increased demand, they need to be well documented.

People power

An important value driver in any company is its work force — particularly its management team. Key executives that are staying with the company, along with a succession plan that has groomed individuals to assume greater authority, is also likely to be attractive to buyers.

Are you ready for buyers?

Knowing the value of your company is one thing, successfully conveying its value to buyers is quite another. Serious buyers will perform comprehensive due diligence, so be ready for them with a due diligence package that includes:

• Historical and current financial statements,

• A current business plan, organization chart and budget,

• Updated descriptions, and cost and capacity information for production equipment, and other major assets,

• Information about your company from trade associations, independent researchers and other outside parties,

• Contracts and other documented agreements that support deal points,

• Estimates of assets by qualified industry experts, and

• Correspondence with vendors, customers, and strategic partners that verify potential and forecasted growth.

When you sell a business, emphasizing its key value drivers can mean the difference between underwhelming offers and a lucrative deal, so start thinking today about how you’ll put your best foot forward.