“ Maximise the Value of Your Business Tony Arena

Every business is currently perfectly designed to achieve the results it is currently achieving

Business Buyers

Business Sellers

? Questions How Much How Who What then When Why

? Questions How Much How Who What then When Why

? Question Why Are You In Business

? Question If someone tapped you on the shoulder tomorrow to buy your business, and a transaction took place, who would get the most value?

The money you put into it The money you need to pay your debts The money you need to retire The years you have put into the business A multiple of your profits A multiple of your gross revenue What is Value...it is not... ?

It’s worth only what a buyer will pay for it. What is it worth?

… and a buyer will pay today’s price for what next year’s profit should be. The Truths

Two ways to Build Value Build Profit Reduce Risk

Only Five Ways Out Sale of whole or part to individual or company Transfer to family members Merger Public Float Slow death

Characteristics of High Value Vendors Have a two to five year plan Don’t have to sell Know the “target price” Know their “target buyers” Are well prepared for sale

Who Will Buy? Individual (private) buyer –Mum and Dad –Buying a job –Based purely on profit –Risk assessment will pull down price –Preparation is the Key

Who Will Buy? Corporate Buyer –Economies of scale can count in your favour –Special value can play a part –Risk in the marketing process –Risk in due diligence process –Preparation for sale different

Valuation by Rule of Thumb Only based on Gross Revenue or other Inflexible Quick and easy Industry acceptance No reference to profit

Valuation by Return on Investment Determine Profit Internal and External Analysis Assess Risk Choose a multiplier of profit Compare recent sales Arrive at a valuation figure

Valuation by Asset Method No Profit Assets valued at realisable value in marketplace Stock marked down heavily Last resort Negative Goodwill

Business Buyers Point of View Do I like the business? Can I replace the owner Could I run the business? Will it fulfil my goals? Will it grow? Will I maintain the earnings?

Value Post 2000 Industrial Age - Assets Post Industrial Age - Profit Information/Services Age - ?????

Value Post 2000 Industrial Age - Assets Post Industrial Age - Profit Information/Services Age - Profit and... –Clients –Intellectual Property –Systems & Infrastructure –Brand and Goodwill

The Hot Keys Financial Administration Systems Infrastructure Brand Growth Prospects

The Hot Keys Financial –Provable on the documents –Reasonable (with add backs) –Maintainable 1

The Hot Keys Administration –Company, Business and Domain Names –Insurances –Contracts with suppliers/clients/staff –Policies and Procedures –Data and other Security 2

The Hot Keys Systems –Operations Manual –Marketing Processes –Systems Maintenance –Control –Flexibility 3

The Hot Keys Infrastructure –Owner’s role in the business –Departmental delegation –Experts and outsourcing –Strategy related 4

Building Infrastructure Outsource, employ or partner Plug the weaknesses Affordable growth Certainty Profit and value a must Long range thinking

The Hot Keys Strong Brand –Integrity and Values –Track Record –Public Relations –Consistency of Message –Emotion and Trust 5

The Hot Keys Growth Prospects –Demographics –Socio-economics –Industry Strength –Stage of Development 6

The Hot Keys Financial Administration Systems Infrastructure Brand Growth Prospects

Keys for Success Preparation for Sale Transferability Systems Timing Brand Trust

What do you need ? Marketing Sales People Skills Clients New Business Profit / Numbers Recruiting Documentation Business Planning Consolidation Out BackUp Front

The Way Ahead Plan –When to Sell and for How Much –Personal SWOT Analysis Do the Paperwork Establish Financial Reporting Framework Plan Infrastructure and Systems Brand and Emotion will follow

Business Maximiser

“Start Planning your Exit Strategy Now”

Successful Business Seller