What drives the value of your business

A quick checklist of some of the key things that drive the value of your business to a potential acquirer

Key questions an acquirer will ask themselves include:

• What are the biggest risks I run here?

• How can I integrate the business into mine?

• How experienced in mergers and acquisitions are the vendors?

• The return on our energy, money and focus has to be really worth it.

• Buyers will use several different methods of evaluating a business, and will be looking to obtain a good return on investment; hopefully within a 3-5 year timeframe.

You add to the value of your company if you are able to demonstrate

• Rarity Value

• Niche Market

• Good IP

• Positively cash generative

• Reliable recurring revenue

• Multiple revenue streams

You reduce the value of your company if the buyer perceives risks like

• Litigation

• Vulnerable to new legislation

• Shareholder disputes

• Vulnerable supply chain

• Dependence on a few customers, people, offerings

In simple terms you maximise value by identifying and dealing with the right buyer, reducing their perceived risk, highlighting the potential and controlling the deal process.