Boosting Business Value: Preparing for a Future Sale – a guide for professional advisors

We understand the challenges professional advisors may experience when guiding clients towards a successful business sale.  Short-term priorities such as securing contracts, managing cash flow, and recruiting often overshadow long-term exit strategies. However, encouraging your client to focus on future value can yield significant rewards for the business.

Immediate Gains & Long-Term Value

Fortunately, many actions that enhance future sale value also deliver immediate benefits. By strengthening earnings, reviewing existing contracts, and creating a solid foundation for investment, one can improve the business’s resilience and attractiveness to potential buyers in the future while simultaneously enhancing its current performance.

Five Key Strategies

Here are five key areas for professional advisors with clients looking to exit in the future to focus on:

1. Strengthen Earnings Resilience: Your client could consider diversifying revenue streams by entering new markets or launching new products. This reduces reliance on single customers and improves the business’s ability to withstand market fluctuations.
2. Review and Shore Up Contracts: You can play a key part in analysing your client’s contracts with customers, employees, and suppliers for their strength, defensibility, and enforceability. This ensures the business is well-protected and enhances its appeal to buyers.
3. Create a Credible Investment Basis: You can support your client by developing costed forecasts for investments in areas like new plant and equipment or targeted recruitment. This demonstrates a clear path to growth and increased returns, boosting investor confidence and attracting higher valuations.
4. Target Potential Buyers: It’s important to identify potential trade buyers or private equity firms that align with the business’s growth strategy now. This proactive approach can significantly enhance the likelihood of a successful sale further down the line.
5. Bring Employees On Board: You and your client should be looking to proactively address employee concerns about a potential sale and emphasise the positive impact on their future. Your client could consider employee ownership trusts (EOTs) to incentivise employees and foster long-term growth.

Conclusion

By proactively addressing these areas, you can help your client prepare for a successful future sale while simultaneously improving the business’s current performance.

Let’s talk

If you would like to discuss any of the issues raised in this article or find out how we can help your clients prepare for sale, please do give us a call.

Rehan Ahmed  
Managing Director
Quantuma Advisory Limited

rehan.ahmed@quantuma.com
www.quantuma.com