Now, more than ever, it is vital for business owners to make sure their business is ready to go to market. There are eight drivers that are measured in the due diligence process of an acquisition. Most owners think their business is attractive, but if they have not done their own analysis of these eight drivers, they may be shocked by the discounted offers they get or possibly none.
At Gardner Wallace we have assessments that are easy and quick to complete. The assessment scores you in eight drivers that are assessed by potential buyers, investors, or bankers. They also show your score compared to your industry average. By understanding your score, it is easier to improve the areas that your business falls short in. This will help you to target the areas that are most beneficial to your business and the value of your business. Often, owners believe if they grow the revenue, they grow the value of the business. This is not always the case. It should be done by increasing your score in the drivers which increases the value and increases the multiple of EBITDA.
The other area which commonly gets ignored is the wealth gap. The wealth gap is the amount of income needed to remain in your lifestyle. Is the potential value of your business enough for you to live on? Don’t forget taxes and fees! If it is not, you either need to have saved outside of the business, or you will need to increase the value of your business before selling. It is important to know well in advance if you are on track for retirement.
One last thing that is overlooked, is a formal written succession and contingency plan. Only 30% of businesses survive the second generation if they have not formalized this. Only 10% survive a third generation without a formal plan. We do not only help formalizing the plan we make sure there are retention strategies for your key employees so that when a business is sold or a transition occurs the next owner is not worried about losing the most important people needed to be around after the transaction. It is very important to de-risk key people leaving new ownership. That brings more cash to the seller. As a seller of your business, you want to be sure the terms of the sale are in your favor.
At Gardner Wallace Financial Solutions, we are a team of advisors that treat every relationship with the care it deserves. We offer holistic and proactive financial services and work with you to understand, work towards, and achieve your goals. We work with business owners to help them mitigate business risks, become more efficient in their business and their personal financial plans, and help them to visualize how to get on track to reach their financial goals.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS or Kestra AS are not affiliated with Gardner Wallace Financial Solutions. Investor disclosures: https://www.kestrafinancial.com/disclosures
Robert Gardner, CEPA, CFEd®
Partner, Business Continuation
Frost provides a full range of banking, investments and insurance services to businesses and individuals in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost has helped Texans with their financial needs during three centuries.