3 Takeaways from Part 1 of “How and Where to Build Business Value in a Tough Economy”

3 Takeaways from Part 1 of “How and Where to Build Business Value in a Tough Economy” – Financial Reporting

Posted on June 24, 2020 by Fusebox Marketing

This past Friday, Tenney delivered Part One of a three part “Deep Dive” webinar series presented by Truckload Carriers Association. Each part in this timely educational series equips business owners to build business value in areas they can completely control. The focus of part one was building value in the area of financial and operational reporting. Here are three takeaways from the June 19^th Deep Dive.

The speed and accuracy of your reporting during the buyer’s “first impression” may dictate whether a buyer places any kind of value on your business at all.

Many buyers are looking at multiple deals at the same time. You should expect the buyer to make up their mind about whether or not they are interested in pursuing a deal very quickly. The more effective you are in capturing their attention through speed, accuracy, and preparedness, the more likely you will be to separate your business from the rest of the pack. Quick tip: Create a one page teaser that has a buyer’s FAQ’s preemptively addressed. Then, update it quarterly. This will demonstrate that you are a) on top of your game and b) already expecting and or receiving offers. These two things alone, will affect the way a buyer initially perceives the value of your business.

The historical accuracy of your budget projections compared to actual results can affect the way a buyer values your future projected performance and, consequently, the structure of an offer.

When a seller is able to present data that demonstrates you have been creating and managing accurate financial budgets, it makes everything you are suggesting about future performance more credible. This is a function of de-risking your business. When you reduce the risk of transferring ownership to a buyer, you simultaneously drive the value and demand for your business up. Also, there is much better chance that you will command more cash at closing versus an earn-out or seller note. Seller notes and earnouts can be wonderful instruments to expand the total sale consideration for sellers. However, if you can command cash at closing, we recommend you take it.

In order to increase the likelihood of getting paid, many companies need to get serious about what will be required to survive the scrutiny of the due diligence process.

Many deals with premium offers are lost because owners forget that securing a high offer is different than receiving a monster check. Few businesses are ready to efficiently navigate through due diligence. As a result, they can’t fully capitalize on the amazing business they have built. The demands placed on your leadership team to produce all kinds of financial and operational reports during the process due diligence is mind-blowing for some. Are you ready? Start educating your leadership team about the type of information they will be required to produce during due diligence. Life changes over night. If you decide you want to sell your business, don’t allow a lack of preparedness around financial and operational reporting keep you from getting the money you deserve.

If you don’t know where to start, reach out to Tenney Group. We can help you get on the path to building value by focusing on areas you can control during a tough economy.