At this point in my career I’ve been on give or take 100 business transactions, both buy and sell side. The vast majority of those being on the buy side. One underlying theory that I completely believe in is selling a business shares a very common characteristic with selling a house. The characteristic that everyone can easily identify with is that a staged business / house can fetch a premium. Furthermore, a staged business / house could be the difference in a buyer or no buyer.
Think about the basic concept behind staging a home. It is to take something with a strong foundation and present it in the best way possible. If you are selling your business this concept still applies. Likewise, if you are positioning to sell your business in the future you should have a strategy in place years before you make that exit decision. Whether we are talking about flower beds that pop or a fresh coat of paint to analytics and KPIs that wow, both make your asset easier to sell and will fetch a higher price.
Too many times I’ve reviewed sound acquisition targets with no operational metrics, they can’t close their books, and then there are the companies that couldn’t even populate a data room. Do you think those businesses got a premium multiple or even a market multiple?….many we flat out passed on.
Not being able to access your data and present it into usable and timely information is already handicapping your business operationally. A potential buyer will just view this as a risk and one with an attached investment just to obtain reliable data. Whether it is a strategic buyer or a financial buyer, both will demand key metrics and reliable financial data.
The great news is the solutions are out there. Roghnu can help you automate data sources to produce key metrics, we can help you migrate and archive data needed to during diligence efforts, we can help you connect disparate applications you use that don’t currently communicate, and we can help you re-engineer clunky processes that clutter your focus. We can even implement a new ERP that will allow you to streamline your financial close processes and make your reporting so robust you would certainly impress any suitor.
Of course, each of these solutions requires an investment. However, if you couldn’t sell your business or you can now fetch 0.25x or 0.5x more, can you imagine the ROI? And if implemented in advance of a potential exit think of how much you could save replacing manual processes or increasing your profitability with the data you can now leverage operationally. We have done this for other clients and we can do this for your business. Let us help you get your house in order.
About the blogger:
Chris Thomley is the CFO of Roghnu after starting his career at EY then moving over to a client he has over 20 years of financial experience. Having served in the Controller and CFO capacity for largely private equity backed companies, he has been involved in all aspects of operational enhancement as well as M&A strategies. He has been involved in approximately 100 acquisitions and has successfully sold two businesses to publicly held strategic buyers.LinkedIn