INCREASE BUSINESS VALUE...
MAXIMIZE YOUR REWARD.
You might have an idea of what you think your business is worth, but how valuable is it through the eyes of a buyer? Expressed in its simplest form: Value = Return / Risk. However, practical application of this simple equation is complex with several different measures for Return and seemingly endless elements of Risk. This is further complicated by the different types of buyers: individual, investment, strategic, financial, private equity, family, employee or partner. But one thing is universal – all potential buyers want a profitable, well-run company with a clear path to continued success. Colorado Business Exchange utilizes the Value Builder System™, a statistically proven methodology that identifies and improves eight key drivers of company value, to help you increase Return and decrease Risk. We analyze where your business stands currently and then work with you to increase profit, reduce buyer concerns, and make the business run smoothly without you – so you can ultimately leave your company with the highest reward possible.
The Business Value Drivers
Financial Performance and Controls
Obviously a company’s top line revenue and bottom line profit are essential to its value. But how defensible are the numbers? What’s the quality of financial records? Since the quality of financial reporting influences a buyer’s perceived investment risk, effective financial controls are required to support claims of consistent profitability. Colorado Business Exchange helps you look at your numbers through the discerning eye of a potential buyer, so you can take steps to ensure their accuracy and reliability.
We know you’re proud of your company’s past accomplishments, as you should be. However, acquirers aren’t looking to purchase the past. They’re seeking an investment in a future stream of profits. Colorado Business Exchange helps you develop an appropriate growth strategy by pinpointing your product and service lines with the highest growth potential and the lowest investment risk. We also identify other areas of realistic growth such as expanding to another market or cross-selling additional products to your existing customer base. Of course, increasing your growth potential in the eyes of a prospective buyer increases the likelihood of an attractive offer.
Relying too much on any one constituency is a red flag for potential buyers. In analyzing your business, buyers want to see that you’re not overly dependent on any one customer, employee, or even supplier – otherwise they’ll assess additional risk, thereby reducing the value. Colorado Business Exchange helps you identify these dependencies and offers solutions on diversifying your customers and suppliers, as well as decreasing your dependency on any one employee.
Working Capital Needs
How much working capital does your company need to operate, and does your existing cash flow adequately support those needs? The more cash your business needs to operate, the less attractive it will be to potential buyers. An imbalance of cash-in vs cash-out is an obvious concern for potential acquirers. Colorado Business Exchange looks for ways your business can generate more cash and reduce the amount of cash that’s tied-up in cash flow, from collecting receivables faster to extending payables, so that your business is more attractive to acquirers. Simply put, more money needed to operate the business means there’s less money available to pay for it.
How your business generates revenue is just as important to a potential buyer as how much it makes. Buyers are especially interested in companies with consistent recurring revenue such as business models with a subscription base or those that have long-term contractual arrangements with customers. Colorado Business Exchange helps identify opportunities for annuity revenue in your business with an emphasis on improving efficiency and cash flow. The higher proportion of recurring revenue your business takes in, the less risky and more attractive it will be.
Has your product or service been commoditized, or is it unique in the marketplace? Buyers look closely here, as the more unique your product or service is, the more control they will have over pricing and profits. We help you take a close look at your differentiated market position, and evaluate if you’re effectively communicating that to your customers in a meaningful way. If you don’t have a unique market position, we work to identify areas where you could potentially create one.
Acquirers don’t just look at the revenue your business generates; they also look closely at who writes the checks – your customers! How likely are they to keep coming back? Do they recommend you to friends? Potential buyers want to know, and they want measurable data to back up your claims. Colorado Business Exchange helps deploy a customer survey utilizing the Net Promoter Score, which is a widely recognized measure of customer satisfaction as well as a proven predictor of a company’s future growth rate. We will use this survey to benchmark your customer’s satisfaction, measure changes over time, and effectively communicate your customer’s satisfaction to prospective buyers.
Management & Systems
Are you the key person that employees, customers and suppliers turn to for problem solving? When you go on vacation, does your business run smoothly or do things tend to start falling apart? Potential buyers want to know how dependent your company is on you personally. The more it is, the less interest they will have. It will be very difficult to sell the business or even transfer it to an insider if the person central to the operations is going to leave. Colorado Business Exchange helps you develop management, systems and processes that allow the company to operate smoothly without your involvement – making the business more attractive to buyers and more valuable to you.