"What challenges most often lead to a decrease in the valuation of a business?" -- I'm paraphrasing the question asked by Beth McKinley, CEPA, FIC at the #exitplanningsummit this week. But the answers from the panel were illuminating: - Operational inefficiencies - CEO egos - undefined metrics & KPIs - lack of process documentation If you're thinking about getting the most value from the sale of your business, addressing these things can dramatically improve that multiplier and make buyers more interested. #exitplanning #businessgrowth Ripples Edge Advisors
I missed that session! In my world, I witness sellers who have little to transfer. They do so much of the business that they ARE the business. Without them, there’s nothing to sell. It contradicts the typical owner mindset to decentralize themselves for a higher valuation. One way or another, they learn it.
Operational inefficiencies, CEO egos, undefined metrics, and lack of process documentation can decrease a business's valuation. Addressing these areas can boost the sale value significantly. Kimberly Wasney
I wouldn't underestimate the importance and impact of the people, especially the leadership team. If a business has unique IP or product offerings, the people side of the equation can ultimately determine the success of a sale. In addition, litigation (either pending or active), potential costs (workers comp, FLSA or OSHA issues) and things like burdensome employment agreements or CBAs in a union environment should not be dismissed as critical. The CEO's ego is definitely a concern, but not the only 'people' related issue.