Determine the value of the business in its current state
Determine a future ‘aspirational’ value for the business
Set a plan to fill the gap between current and aspirational value
Implement the plan to reach a better business value
An unrenovated business sells for much less than one in tip top condition.
Purchasers of a business perform ‘due diligence’ and will use what they learn to drive down the price. It’s best to perform your own ‘due diligence’ and fix the issues, so they can’t justify asking for a discount.
Business Value Improvement and Exit Planning
We had a client recently who sold their business for about double what they thought it was worth. When we first began conversation with them they were exhausted and ready to exit the business. When we explained the value of just another two years to build up the value prior to the sale, they decided it was well worth the effort to create the ‘first class’ retirement they now enjoy.
The sad fact is that most business owners overvalue their business, due to their emotional, time and money investment over sometimes many years. On the flip side a potential buyer looks at it as a cold hard business transaction that needs to deliver the right return on investment. Unfortunately there is often a big gap between the two numbers. There is a great opportunity to build up the value someone is willing to pay if the business is set up with a business sale in mind.
Due Diligence is analysis that is performed by someone looking to buy a business. It delves into just about every aspect of the business with particular focus on financial results. During this process buyers are looking for reasons to reduce the sale price for the business. It pays for sellers to do their own Due Diligence well beforehand to fix any issues that could have a negative impact on the value of the business.
Exit Planning is a big job. If you want to get the best value when you sell your business and a smooth handover to new owners it needs serious planning and implementation. There’s an old saying “You can’t sell your head!” Many business owners have all the knowledge in their head and they need to extract that knowledge into systems that can easily guide others to run the business. Often a final payout for a business is dependent on a smooth handover so you don’t want to jeopardise that.
We have an understanding of our business like never before! We now have accurate Key Performance Indicators (KPIs) which means we can make informed business decisions and grow the company profitably at every turn.
Warwick Glendenning, CEO
Power Systems Consultants Group
If you are working frantically in your business, it really doesn’t matter how busy you are – it is crucial to take the time to work on your business to ensure that all the effort is worthwhile. Our CFO On-Call is invaluable in guiding and supporting us around financial hazards.
Lesley, Peter & Joshua Turner, Directors
I can’t speak highly enough of John and CFO On-Call. I would recommend them to any business owner because we don’t know about this stuff. We don’t have the time to do an accounting degree, but we need someone to guide us. I’m now living the dream – running the business remotely! The internet has freed me up to work remotely. Everything is in the cloud now and CFO On-Call plays a big part as my Virtual CFO!
Michael Brewitt, Director
Velocity Electrical, Construction
We now have the useful financial information we need to make informed financial and business decisions at the right time. His input has led to a 27% improvement in profitability.
Greg Jacques, General Manager
My CFO On-Call Michael came in and implemented a range of new systems and reports that we still use today. I now have a P&L which I can read and actually understand! Michael’s great at putting things into layman’s terms and helping us make sense of complex concepts. And his value doesn’t just stop at numbers – due to his commercial background he has also been a great asset to us in terms of recruitment and managing staff.
Jenny March, Owner
Before engaging CFO On-Call, the bank wouldn’t support me, so debtor financing was my only option. CFO On-Call set up our new management reporting and forecasting, and the bank changed their mind. Since then, we have grown total revenue by 17%, increased gross margins from 17% to 37% and improved debtor days by 36%. We’re going from strength to strength!
Peter Deverall, CEO
Safa Glass, Brisbane