M&A Valuations
& Exit Planning

Two commonly asked questions we hear from business owners planning an M&A exit strategy is, “How much is my company worth?” or “How can I make my company worth more?” Initially, the answer to both questions is the often dreaded, “It depends.”

To adequately answer these questions, one must do exit planning with an in-depth analysis of the company performed from both an operational and a financial perspective. This analysis should also include industry benchmarks and how your company compares as well as identify that which is affecting your company’s value such as growth and risk.

This analysis is commonly referred to as a business valuation. A proper valuation provides more than merely a value range for the business. It can also be a vital management tool that leaves you well positioned to implement operational efficiencies, incentivize key executives, and properly plan for a smooth transition.

When you’re a business owner or founder of a company, it’s hard to stay detached. In fact, many owners find it impossible to remain objective, especially when deciphering data tied to their company. If findings paint a less than optimistic future, owners may be tempted to diminish their conclusions which prevent them from preparing for the future.

As independent advisors, we specialize in looking at all financial data, avoiding speculation, and producing verifiable reports that are free from opinion or bias. No matter if the analysis is negative or positive, having accurate reporting is vitally important when talking to investors, potential buyers, and others interested in your company.

Business owners who are proactive and keep an accurate pulse on the valuation of their company (i.e., with annual valuation updates, etc.) are in the best position to negotiate and capitalize on marketplace opportunities when potential suitors come knocking.

Sometimes in the marketplace, the words “value” and “price” are used synonymously. While the two may intersect, it is usually at different points in the economic or business lifecycle, and there may be a disparity between the terms. The terminology difference occurs when a valuation is critical to taking advantage of a strategic acquisition at a high-value/low-price versus being in a strong position to sell your business when a legitimate market offer comes in at above normal value.

The advisors at Vision Point Capital have years of experience appraising businesses, helping owners become exit ready, and advising during M&A negotiations.