Exit and Maximising Your Multiple
The golden rule of buying a business is "I shalt not buy what I can easily replicate myself". So in order to sell your business, you need to be unique, stand out and do things that others struggle to replicate. This section will guide you through building value into you business, making it more attractive to more people and how to realise the maximum financial return when you do finally exit.
We are proud to be fully Certified Value Builders - Instead of simply giving you a valuation for your business (Operating value NOT Bricks and Mortar), we show you your current value, what your future value could be and proactively take you on the journey of change to achieve the higher valuation. We work on the 8-Pillars affecting your business value, 4 Personal pillars and your financial freedom point calculation to maximise your realisation on exit.
The 3 step process - Building; Accelerating and Harvesting
Building
Building a company that runs successfully without you involves thinking of your business as an asset, rather than a job.
The core idea is to set your company up to be self-managing and attractive to an acquirer—even if you have no plans to sell. Making yourself attractive to an acquirer involves the very same things you need to create a self-managing company, because in essence, they are the same thing.
Acquirers look for companies that can run without their founder, which also happens to be the key ingredient in a self-managing business. Therefore, our approach involves optimizing your company’s performance across eight dimensions important to acquirers.
The 3 step process - Building; Accelerating and Harvesting
Accelerating
Once you’ve got a business that can run smoothly without you pulling all of the strings, the next step in our process is to create a recurring revenue stream.
An annuity stream of revenue makes your company more predictable so you can plan for the future efficiently. It also boosts the lifetime value of your typical customer and most importantly, it jacks up the value of your company—in some cases doubling or even tripling the value of each dollar of revenue in the eyes of an acquirer.
This step can be a head-scratcher for a lot of owners, but there are nine unique subscription models to choose from, and just about any business can leverage at least one.
The 3 step process - Building; Accelerating and Harvesting
Harvesting
The final step in our approach involves harvesting the value you’ve created. It’s one thing to have built value on paper, but it’s quite another to have the cash in the bank. Selling your business well is both science and art.
Our methodology will teach you how to build a compelling narrative and will give you a step-by-step guide for avoiding some of the land mines that trip up even the savviest owners.
Our approach shows you how to value your business, time your exit to maximize your take, find buyers and create a bidding war, which will allow you to punch above your weight in a negotiation to sell.
Build your own dreams
Or someone else will hire you to build theirs. Here is how you can take action – starting today.
Ebook and Podcast
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Value Builder - Built to Sell Podcasts
The Best Business Podcast | Maximize Your Exit
From Gretzky to Popovich: What Sports Legends Teach Us About Business Value
Have you ever wondered why some athletes struggle to transition from player to coach? This challenge isn't just limited to sports; it’s a critical shift that many business owners need to make to build a valuable business.
Take Wayne Gretzky, for example. Despite being arguably, the best hockey player of all time, he failed to make the playoffs in four years as the coach of the Phoenix Coyotes. Similarly, Ted Williams, the greatest hitter in baseball history, couldn't lead his team to the playoffs in four years as a manager
Articles - Here are some samples - For the full list
How First Impressions Can Impact Your Company’s Value
When potential acquirers first evaluate your business, most will quickly categorize it into a specific industry. This initial classification can significantly impact the value they place on your business. Some industries are inherently perceived as more valuable than others, and if your business is placed in a less favorable category, it can be challenging to change that perception.
Articles
3 Ways to Get Your Employees to Sell More
Who does the selling inside your business?
If you’re involved, your business will be less valuable than if you weren’t. Investors and acquirers are reluctant to invest in a business where the owner is the rainmaker of the company.
The team at the Value Builder System™ analyzed more than 70,000 businesses, and the data revealed that companies that can sustain a three-month absence of the owner are more than twice as likely to receive a premium acquisition offer (defined as greater than 6x pre-tax profit).
In other words, to maximize the value of your business, you need to get other people doing the selling.
Easier said than done.
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Big vs. Valuable
Most founders aim to boost sales, but prioritizing top-line growth can attract low-quality revenue, potentially reducing your company’s value.
To an acquirer, revenue quality varies. They prioritize future revenue predictability, valuing recurring income from contracts and subscriptions higher than one-off sales. Consequently, firms with recurring revenue often command a revenue-based valuation, whereas businesses reliant on transactional revenue are usually valued based on a multiple of EBITDA.
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Growth vs. Value
We live in a business world where growth is worshipped. Entrepreneurs measure themselves by how many people they employ. Many founders dream about making lists whose sole criterion is revenue growth.
However, if your endgame is to sell your business to a strategic acquirer one day, indiscriminate revenue growth may not result in a commensurate spike in your company’s value; in some cases, it may even detract from it.
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Just Add Capital
If you’re looking to attract an investor or an acquirer one day, expect them to dig into your sales and marketing process.
If you’re a company that sells to other businesses, an investor will want to know where you get your leads from and how much each costs you to generate. They’ll want to know what technology you are utilizing to support your sales team. They’ll want to understand how your sales reps get meetings and how many appointments a good rep has each week. They’ll want to know the close rate of a high performer and how it compares to an average performer.
The investor’s questions aim to gauge the scalability of your sales model under significantly higher investment rather than simply to assess your past performance. Acquirers love stumbling over a business where the main constraint to growth is capital.
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The Switzerland Structure
One of the eight factors that impact the value of your company is something the team at The Value Builder System™ refers to as “The Switzerland Structure,” which emphasizes the importance of business independence. It cautions against excessive reliance on any single entity, whether suppliers, employees, or customers. While many business owners recognize the risks associated with dependency on a high-profile customer or employee, the hazards of anchoring to a single supplier are often overlooked.
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Core Values as a Growth Catalyst: The $14 Million Journey of Sauceda Industries
In the competitive third-party logistics (3PL) sector, Jay B Sauceda turned Sauceda Industries into a standout business, ultimately reaching $14 million in sales before being acquired by Cart.com.
His secret weapon? His core values: "Yes, And," "Explore More," and "Give a Sh!t."
Articles
3 (Creative) Ways to Get Your Business to Run Without You
If you aspire to build a valuable company, one crucial factor is to ensure your business can operate independently without your constant involvement, but embarking on this journey can feel daunting. In this article, we'll explore three cost-effective, simple strategies to set your business on a path to autonomy and allowing it to thrive without your constant presence.
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Hidden Value: A 3-Part Approach to Hiring High-Potential Employees
French economist Jean-Baptiste Say characterized an entrepreneur as one who “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” This expands the term’s literal translation from the French for “one who undertakes” to include the concept of value creation.
Bootstrapping founders epitomize the principle of creating more value with less resources, particularly when hiring. While it may be tempting to try and hire C-level executives with extensive resumes and impressive LinkedIn profiles, smaller businesses often cannot afford those seasoned professionals. To combat this, value creators need to develop a knack for hiring talented people about to blossom.