Is your business worth buying?

By: Jeff Gau
Dec 7, 2018 9:01:20 AM

Acquisition activity in the copier industry continues to accelerate, providing opportunities for both buyers and sellers. We’ve been buying businesses since 2005, and I feel like we’ve pretty much seen it all. 

Track records and sustainability go a long way in establishing credibility during the process. As you prepare to sell, we recommend that you provide information that fairly and accurately represents your business. Ultimately, this all gets validated during the due diligence process, but it’s a good practice to establish trust early on.

While revenue and profit are certainly important when determining valuation, there are other factors that buyers also consider. Here are some ways you can better position your business for sale:

  1. Create a sustainable EBITDA.
    EBITDA is a key factor in any deal. What’s most important to buyers is the sustainability of your EBITDA. Sometimes sellers portray earnings that can’t be sustained. This can detract from the company’s valuation and create conflict during the process. There are a number of ways to highlight the potential improvement, or challenge the sustainability, of a company’s EBITDA. I will talk about both in my next blog.

  2. Establish sales leadership for a transition.
    It’s common for an owner to be the sales leader within the organization. If you plan to leave when selling your business, make sure you develop an effective sales structure for a successful transition. This includes good sales leadership and a mix of performing and emerging reps. This is a really big deal to the buyer—don’t overlook it.

  3. Right-size your inventory.
    If any of your inventory has had a birthday, odds are that it does not have value to potential buyers. Proactively clean up old inventory by writing it down, selling it or disposing of it. Good inventory is typically less than six months old. This is generally a good practice, even if you’re not selling your business.

  4. Separate your lease portfolio.
    Many dealerships have an internal lease portfolio. Separating it from your copier business provides a clearer picture on how each is performing. If you’re not already doing this, changing it will help you run your business better and position it well for sale.

  5. Prepare your office building.
    Facilities are usually a component of a transaction. A buyer will typically consider purchasing your building or signing a fair market value lease as part of the transition. Make sure your building presents itself well—just like you would if you were putting it on the market. As owners, it’s natural to not even see the flaws. Scrutinize your building’s functionality and appearance and identify ways to make it more attractive to a buyer.

You don’t have to do any of these things if you don’t want to. But if you want to maximize your company’s value, these are some recommendations. All businesses have a value, and when the timing is right, you can find the right buyer

Topics: valuation