As business valuators and advisors, we are often asked, “What can I do to make my company more valuable?” While the value of a business is dependent upon myriad factors, measures that increase cash flow, decrease risk, or increase growth prospects for a business will have a positive effect on value. But what steps can you as a business owner take to bolster the value of your company? There are several strategies that you can implement (apart from obvious changes such as raising prices, cutting costs, or just hoping a rising economic tide will lead to continued growth) that will be accretive to value when the time comes for an exit. The key to maximizing the value of your business is stepping into the shoes of a buyer and understanding what will make your business more attractive, and ultimately more valuable, from their perspective.
Business owners can add value by implementing and maintaining adequate and documented financial systems and internal controls. This may include engaging reputable outside accountants to review or audit financial statements, hiring qualified managers and staff to ensure that the company’s accounting records are accurate and that necessary internal controls are in place, or obtaining the services of a qualified fractional CFO if the company does not have the proper accounting staff in place.
The process of preparing your company for sale is a long and complex one. Business owners anticipating an exit should begin the process of planning years in advance and involve the services of experienced accounting, legal, tax and financial experts to steward them through the sale and pre-sale process.
As a business owner, you know your company, services, and/or products better than anyone, and explaining the benefits of what
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