How It’s Done
The Pre-exit Evaluation identifies and conveniently bundles the information you need to make empowered decisions before you exit.
Most business owners experience an exit once in a lifetime. You know everything about your business. From competition, labor constraints, and opportunities on the horizon. However, you may have no idea where to start or how to get the information needed to make an informed decision about an impending exit. We are here to help. Bringing together valuation expertise and proven exit and succession success, we can guide you through the uncertainties. Unfortunately, over 70% of business owners are unhappy after a transition because they didn’t have the right information or knowledge of exit options available. We won’t let that happen to you. We will make sure you are empowered with the knowledge you need to make the decisions that are right for you with no regrets.
Financial Analysis
All business owners focus on tax minimizing strategies. Pre-exit, a financial analysis with a lens toward re-casting financials that paint a true picture of the operations of the company is the foundation of a business valuation. Most likely your tax returns do not represent the value of your company and your bookkeeping has been geared toward tax compliance. Pre-exit, a shift in strategy is required to determine the value you have built.
How it is done:
Financial Trend Analysis and Peer Comparison
Calculation of EBITDA (cash flow) that would be used in calculating a purchase price
Identification of adjustments that would be made to EBITDA by a potential buyer that affects price
Recommendations for accounting procedures or adjustments to financial records
Salability Analysis
Valuation in concept is simple. Your business is generating cash flow. The value of your business is determined by the cash flow it earns and the ability to transfer it to a buyer. It’s a combination of the level of cash flow you generate and the risk of transferring it to another owner. The Salability Analysis will measure the risk of transferring what you currently earn and identify what needs to be done to minimize the risk to a potential buyer.
How it is done:
SWOT Analysis
Identification of risk to a potential buyer
Recommendations on minimizing perceived risks to a potential buyer
Understanding of work needed to prepare company for sale
Likely Purchase Price
Valuation is a starting point. Many elements ultimately affect the purchase price of your business. Economic factors, local market conditions, and terms of the transaction are all important to consider in determining purchase price. There are many puzzle pieces and it all depends on how you want to put them together to accomplish your goals.
How it is done:
Analysis of market conditions and Company’s position relative to peers
Understanding of market multiples from real world transactions
Assessing where Company is relative to market multiples
Recommendations on how to maximize value and/or increase success in achieving goals in a potential transaction
Pros/Cons of Exit Options
When buying a house, you may buy the first one you are shown but not after seeing several more. Being able to compare different options is an important part of decision making. Unfortunately, 70% of business owners are unhappy with their business exit. Simply because they didn’t know all of the options available to them. Even if you have a clear idea of your exit, considering at all options will ensure that you have all the knowledge you need to make the right decision for you with no regrets.
How it is done:
Identification of exit options available to business owner
Analysis of risks, benefits, timing, and costs of each option
Understanding exit options in relation to purchase price and deal terms
Reconciliation of exit options and business owner goals
Next Steps
Now you have the information you need to make empowered decisions. Keeping up the momentum is imperative to reaching your goals. Identifying next steps and putting a plan in place to ensure you are able to meet your personal and financial goals will set you on a course to achieve them.
How it is done:
Gathering information as needed or being a sounding board to make decisions on where to go from here
Putting a short term or longer term plan in place for a transition
Coordinating team as needed with expertise with transitions including: business broker, accounting professionals, business coach, transaction lawyers, etc.