In addition to pulling on the levers of value creation as described in a previous article, you can influence the value of your business with the following qualitative and quantitative factors:

• Financials: Ensure your financial statements are clean, accurate, and up-to-date. Take a look at the consistency, predictability and stability of revenue, profit margins, and cash flow in order to help you determine if your business is ready for prospective buyers evaluating it..
• Assets: Tangible and intangible assets such as intellectual property, real estate, or proprietary technology.
• Administrative house in order: Is your company organized, are records accessible, or are there numerous administrative/organizational/legal/tax skeletons in the closet?
• Assess Operational Readiness: Address inefficiencies, risks, or dependencies that may deter buyers. As an example, some common risks include buyer or supplier concentration, warranty issues, unresolved legal disputes, or environmental hazards.
• Leadership team in place: One of the most significant deal killers or valuation killers is the business’ reliance on the founder for viability. Counterintuitively, you should strive toward making yourself irrelevant. Ensure there is a solid leadership team in place that is able to execute, as you would, and is capable of running the business for a sophisticated private equity buyer. This may mean hiring a new CEO, COO and/or CFO, letting them create value for a few years and then entertaining acquisition offers. The investment of time, energy and people will be worth it, as the transaction value will undoubtedly be higher with a strong management team in place. Regardless of whether you intend to ride off into the sunset immediately after closing, serve for a couple of years as an advisor and board member, or continue running the business after the new investors come in, you will need to reduce or eliminate any perceptions of “key man risk.” Can the business stand alone without you and continue to perform? If you quit or died tomorrow, the business ideally would only suffer some minor hiccups, but would be able to continue generating cash without you. You should also consider management retention. How loyal and long-term are your most important employees. Excessive turnover speaks poorly of your culture, confidence in you as a leader or the perceptions of long-term growth and prosperity of the business. Think about who the key employees are. Whom would you trust with the insight that you are beginning to prepare for a sale/ Whom would you trust with key customers or suppliers? Whom would you trust to speak on your behalf with a group of potential acquirers?
• Develop and/or refine a compelling growth strategy: What is the goal or target that everyone involved in the business can see and understand? How, specifically will you achieve that goal? In what timeline? With what specific objectives and tasks to be carried out? Who, specifically, will execute each of these tasks? How will you know they are accomplished (what are the measure/metrics of success)?
• Conduct Pre-Sale Due Diligence: Proactively identify potential issues (e.g., contracts, liabilities) that buyers might uncover.
• Create a Growth Narrative: Articulate a clear vision of future opportunities for the business under new ownership.
• Unique selling points: You may never have considered before the positioning of your company within its market, relative to various types of customers and their needs and purchase behaviors, and compared to competitors and their options. But buyers will evaluate what makes your business unique.
• Customer analysis: will involve determining why customers choose you and not the competition? Why did you choose to sell through the channels that you do? What segments of customers are most relevant to you and why. What is your typical buyer persona? What are their unmet needs and preferences? Why are you not addressing them today – is that a choice or an oversight? Which types of customers do you tend to avoid, and why? What causes customers to abandon you and switch to a competitor? How well does that align with your areas of focus.
  • In other words, you cannot be all things to all customers, so you have probably (consciously or subconsciously) chosen to be a good choice for customers who value low cost, or who place a premium on high quality, or rely on you for exceptional service. Relative to competitors, what are your strengths. In other words, what differentiates you from your competitors? What are your core competencies (unique set of strengths in which you clearly excel relative to the competition)?
  • Have you prioritized the most attractive segments of customers who value your differentiators, and are you influencing their buying behavior with brand messaging?
• Market analysis: Have you positioned your company for success by prioritizing those markets with a rising tide and plenty of upside potential?
• Competitive analysis: By researching how competitors strive to differentiate, what claims and offers they make to customers, where they focus for growth, you will be able to assess where competitors are making mistakes and seize upon them. You may also discover where competitors are onto something – and learn from them.
• Sell-side quality of earnings: Quality of earnings used to be the exclusive responsibility of acquirers, but sellers realized that commissioning an objective, third-party report helps speed the process, and reduces opportunities for buyers to walk away or submit reduced offers. The study essentially validates the current profits of the company and helps buyers become comfortable that the level of profit being presented is in fact, accurate.
• Sell-side market study: The sell-side market study is primarily designed to accomplish three objectives: 1.) Help acquirers become comfortable with a market that they may not completely understand or acknowledge is attractive. 2.) Help potential buyers understand the positioning of the company within this market ) Help prospective acquirers see clear and obvious paths for growth for this company in this market. You should also be prepared to define your market carefully. Draw a fence around your chosen market. What is included and what is excluded. Why? What are the market trends and drivers that you take advantage of. What are the threats and concerns on the horizon impacting your market? Where are the most logical opportunities to expand your definition of your market, and why would you choose to expand there.
• Value drivers: Think about the factors that might make your Company attractive to acquirers. These may include resources, unique capabilities or skills, the attractiveness of the market in which you compete, the power of your reputation and brand, the quality / knowledge / experience of your team, your customer list and loyalty, intellectual property, a clear and compelling growth strategy, expected synergies with the buyer, confidence in the predictability of future cash flows.