EBITDA+ Bridge the Gap.
How to bridge the value gap.
This is the second post in our series outlining Morgan Shaw Advisory’s, EBITDA+ SIX STEPS TO SUCCESS™. Our proven methodology for successfully selling a business and enabling business owners to engineer their own $30 million exit.
Whilst already a well-established financial metric, also widely used to value businesses, in this context EBITDA+ SIX STEPS TO SUCCESS™ stands for:
Bridge the Gap
Information
The Deal
Due diligence
After the event.
Once we understand what a business is worth, what an owner wants (or, more often needs) from the sale and, the gap between the two numbers (see my previous post) we can start to bridge this gap.
Regardless of the various scenarios that could eventuate from this exercise, the valuation process will have highlighted several opportunities to increase the value in the business. This is what engineering a $30M exit is all about – we want to get the maximum value and negotiate more favorable exit terms. To do this we need to build a plan and execute it well ahead of the actual sales process.
Bridging the gap allows:
A bigger pool of potential buyers
A quicker, smoother transaction
More negotiating power (in case a buyer finds something untoward in due diligence)
More favorable exit terms
And ultimately, a higher price.
At a high-level there are 3 areas key to our process:
Setting up of an experienced Advisory Committee
Building a Strategic Plan
Action Sessions to maintain momentum.
The strategic plan is critical in identifying the areas that can be improved, in the context of current market and competitive conditions, not just competitive factors.
We believe our approach is slightly different from other advisors. Yes, we all look to increase the value in a business, but throughout the process, we maintain a very clear focus on the real customer of all this activity – the prospective buyer.
Having purchased many businesses, we can review a business through the eyes of a buyer, not only through the optics of a seller. This is a critical point; to truly maximise value, the buyer needs to appreciate and, be prepared to pay more for that value.
A few points to remember during a strategic review:
Decide what to do, and importantly, what you’re NOT going to do.
Intelligence and data gathering gives us an edge
We can’t anticipate every circumstance, so we need to flexible
It requires discipline, a strong process and stretching your mind. Perhaps being open to things that you may have looked at before or even discarded
Assigning very specific responsibilities and deadlines ensures momentum.
Once the plan has been signed off by the Advisory Committee, they will monitor it and step in when required to help keep things on track. Accountability is essential to achieve the plan. Without that accountability and responsibility, it’ll be left to individuals and day to day business demands often take priority.
This plan and process will also give a buyer confidence that the business is well disciplined and had an approach and methodology to achieve growth.
To ensure you don’t miss a post in this series and to get on the pre-release list for an eBook giving you all the steps and more… just click here.
Corporate advisors, like Morgan Shaw, keep the sales processes effective and efficient, adding value along the way, whilst keeping everyone involved safe and sane. Working with a professional can significantly increase the value in your business and will ultimately result in more favourable transaction terms, a more efficient process and ultimately a higher purchase price.
To understand how you could engineer your own $30 million-dollar exit, know more about the EBITDA+ SIX STEPS TO SUCCESS™ and, how to bridge the gap, connect with the Morgan Shaw Advisory team here.