Placing a number on your company’s value can be a daunting task in even the best situations.
You’ve invested a significant portion of your time in building this company, so you want to see that effort reflected in the company’s value, but you also don’t want to let your own bias alter your assessment of the company. That is where we can help.
BiggsKofford offers Denver-based valuation services to help you assess your company’s value, learn how to build the company in a way that increases that value, and ultimately maximize that value in some form of an exit strategy.
Basic Value Formula
Most business owners understand the basic equation where earnings times some multiple equals the value placed on the company.
The company’s value based on our value assessments can thus be increased either by improving the earnings or increasing the multiple buyers are willing to pay for those earnings.
Improving the earnings is something you’ve likely spend quite a bit of time on, but increasing the multiple is an area where we might be able to help. In many cases, slight adjustments to increase the multiple can make the business significantly more valuable.
How to Increase the Multiple
Increasing a company’s multiple usually comes down to correctly understanding the two different types of variables in our Denver-based valuation services: things we can control and things we cannot control.
Some of the multiple drivers that you might be able to control include size, number of locations, research and development, management, salesforce, growth rate, employee mix, diversification of customers, vendor relationships, geographic coverage, operating systems, and margins.
On the other hand, that multiple value assessment drivers out of your control might include the economy, the market for your goods/services, industry forces, competition, and the barriers to entry in your industry.
Lessons Learned from Selling Companies
The typical sales process starts with looking at the company you’ve built, exploring options for who might be interested in buying that business, and then getting them to agree to buy it for the highest price possible.
One way to build your company’s value is to flip that process upside down and figure out who is getting the best value in your industry. Determine who is buying those high-value businesses, and then use that to determine how you should build your company moving forward.
BiggsKofford has extensive experience in valuation services, which will provide you with the knowledge you need to make sure that you are correctly positioning your company to extract the maximum possible value.
Our valuation services typically involve us anonymously contacting buyers and calculating a hypothetical value for your company. Then we take time to identify the key value drivers that you could be improving to increase that value and provide you with a report on the best way to implement those strategies.
Whether your goal is to sell your business today or twenty years down the road, it never hurts to start working to improve the value of the business you are building. Contact us now to get started on your own value assessment, and let’s see how much of an improvement we can make on your company’s value.